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FALSEDifficulty: Easy50.(p. 207)In a labor market, the market rate is where the lines for labor demand and labor supply cross. TRUEDifficulty: Easy51.(p. 207)Marginal productivity theory argues that when factors of production are held constant, each additional worker is less productive than the last one hired. TRUEDifficulty: Easy7-33
Chapter 07 - Defining Competitiveness52.(p. 208)Other things being constant, in a hiring scenario, the employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person. TRUEDifficulty: Medium53.(p. 208)Marginal revenue is measurable and used by managers to determine both pay levels and how many employees to hire. TRUEDifficulty: Medium54.(p. 209)In practice, organizations use skills and competencies to assess value of labor instead of marginal revenue product. TRUEDifficulty: Medium55.(p. 210)Compensating differentials theory says that paying above market wages will lead to workers with higher ability. FALSEDifficulty: Medium56.(p. 210)According to efficiency-wage theory, paying higher wages than competitors lowers labor costs due to more efficient workers. TRUEDifficulty: Easy7-34
Chapter 07 - Defining Competitiveness57.(p. 211)Signaling theory argues that higher wages leads to greater efficiency. FALSEDifficulty: Medium58.(p. 211)An employer offering lower base pay with high bonuses is likely signaling they are seeking risk-taking employees. TRUEDifficulty: Easy59.(p. 212)Signaling theory applies to both the demand and supply side. TRUEDifficulty: Easy60.(p. 212)Job applicants who will not accept a job that pays below a certain level are acting according to signaling theory. FALSEDifficulty: Medium61.(p. 213)It is likely that workers act in accordance with reservation wage theory with respect to both wages and benefits. TRUEDifficulty: Easy7-35
Chapter 07 - Defining Competitiveness62.(p. 213)The most influential theory explaining pay-level differences is marginal revenue productivity. FALSEDifficulty: Medium63.(p. 213)Human capital theory assumes that people are paid at the value of their marginal product. TRUEDifficulty: Medium64.(p. 214)The product market sets the floor on the minimum wage required to attract sufficientnumbers of employees. FALSEDifficulty: Easy65.(p. 214)Employers in highly competitive markets are less able to raise prices without loss of revenues. TRUEDifficulty: Easy66.(p. 216)Wages in labor-intensive industries are generally lower than in technology intensive industries. TRUEDifficulty: Medium7-36
Chapter 07 - Defining Competitiveness67.(p. 217)Talented individuals have a higher marginal value in larger organizations. TRUEDifficulty: Easy68.(p. 218)The three factors usually used to determine the relevant labor markets are the occupation, geography, and competitors.