Deck 7: Defining Competitiveness

Question 1

A flexible policy that mimics the pay mix competitors are paying is known as a:

A)security policy
B)market mix policy
C)market match pay with competition (match)policy
D)work/life balance policy
E)performance driven policy

Answer 1

C

Question 2

A(n)policy maximizes the ability to attract and retain quality employees and minimizes employee dissatisfaction with pay.

A)employment equity
B)high-turnover
C)lag
D)gap
E)lead

Answer 2

E

Question 3

The marginal revenue of labour refers to:

A)he technology employed by organizations
B)the difference in technology across industries and new technology within the same industry
C)the additional output from the employment of one additional person
D)the level of demand for a product
E)the low-wage, no-mix strategy employed by organizations

Answer 3

C

Question 4

Human capital theory assumes that people are paid at the value of their:

A)marginal product
B)gross profit margin
C)current life situation
D)reservation wage
E)minimum capacity for work

Question 5

Which of the following is true about human capital theory?

A)It assumes that job seekers have a reservation wage level below which they will not accept a job offer.
B)It assumes that high wages lower labour costs if they reduce the need to supervise employees.
C)It assumes employers deliberately design pay levels to signal desired employee behaviours.
D)It assumes that people are paid at the value of their reservation wage, not marginal product.
E)It assumes that improving productivity by investing in training will increase one's marginal product.

Question 6

The additional income generated when a firm employs one additional unit of human resources, with other production factors held constant is known as the marginal ________.

A)revenue of labour
B)cost of labour
C)input
D)net income
E)labour expenditure

Question 7

Which of the following is true about a lead policy?

A)It minimizes the ability to retain quality employees.
B)It believes that high turnover is likely to be a compensation problem rather than a managerial problem.
C)It pays below market rates and may hinder a firm's ability to attract potential employees.
D)It offsets the negative job attributes that contribute to high turnover later on.
E)It increases employee dissatisfaction.

Question 8

A policy to pay below market rates is known as a(n)policy.

A)payroll deduction
B)lag
C)lead
D)edge
E)market match

Question 9

Compensating differentials theory states that:

A)higher wages must be offered to employees when chances of success are high
B)higher wages must be offered to employees to compensate for any negative features of jobs
C)high wages will increase efficiency and lower labour costs if they lower turnover
D)job seekers have a reservation wage level below which they will not accept a job offer
E)pay levels and pay mix are designed to signal desired employee behaviours

Question 10

Although labour market conditions and legal requirements put a floor on the pay level required to attract sufficient employees, the puts a lid on the maximum pay level that an employer can set.

A)product market
B)employee turnover
C)labour demand
D)job market
E)labour supply

Question 11

Which labour demand theory says that pay levels and pay mix are designed to indicate desired employee behaviours?

A)human capital theory
B)signalling theory
C)efficiency wage theory
D)reservation wage theory
E)compensating differentials theory

Question 12

Which of the following is an assumption of economic theories of labour markets?

A)There is a huge advantage for a single employer to pay above the market rate.
B)Pay rates reflect only the base wage associated with employment.
C)People are homogenous and therefore interchangeable.
D)There is a huge advantage for a single employer to pay below the market rate.
E)Employers are not always interested in maximizing profits.

Question 13

The data from product market competitors are likely to receive greater weight when:

A)product demand is not related to price changes
B)the level of skill needed to perform the job is high
C)the supply of labour is not responsive to changes in pay
D)employee skills are not specific to the product market
E)labour costs are a small share of total costs

Question 14

Which of the following supply-side theories is based on the premise that higher earnings flow to those who improve their potential productivity by investing in themselves?

A)compensating differentials theory
B)signalling theory
C)efficiency wage theory
D)human capital theory
E)reservation wage theory

Question 15

What are two key product market factors that affect the ability of the organization to change what it charges for its products and services?

A)marginal product of labour and marginal revenue of labour
B)product demand and the degree of competition
C)industry and product technology
D)reservation wage and human capital
E)efficiency wage and reservation wage

Question 16

Pay policies indicate the kinds of behaviour an employer seeks. This is a prediction of ________ labour demand theory.

A)reservation wage
B)signalling
C)compensating differentials
D)efficiency wage
E)human capital

Question 17

Which of the following statements about external competitiveness is true?

A)External competitiveness refers to an organization's pay relative to other organizations.
B)External competitiveness refers to the total compensation paid by an employer to an employee.
C)External competitiveness refers to pay relationships among employees of an organization.
D)External competitiveness refers to the budget allocation for a department relative to other departments in an organization.
E)External competitiveness refers to the competitiveness between employees of an organization.

Question 18

The average of the array of rates paid by an employer- i.e., the sum of base, bonuses, benefits, and options-is referred to as:

A)executive pay
B)pay forms
C)variance
D)pay matrix
E)pay level

Question 19

Efficiency wage theory says that sometimes high wages may:

A)increase efficiency if they reduce "shirking"
B)lower labour costs if they increase the need to supervise employees
C)lower labour costs if they attract low-quality applicants
D)increase efficiency if they increase turnover
E)increase efficiency if they reduce worker effort

Question 20

The additional output associated with the employment of one additional human resources unit, with other production factors held constant, is known as the:

A)future price
B)marginal cost of labour
C)marginal review of labour
D)marginal product of labour
E)net profit margin

Question 21

Which of the following is a prediction of human capital theory?

A)Pay policies signal the kinds of behaviour an employer seeks from employees.
B)Higher wages improve efficiency by attracting workers who will perform better.
C)The value of an individual's skills and abilities is a function of the time and expense required to acquire them.
D)Jobs with negative characteristics require higher pay to attract workers.
E)Job seekers will not accept jobs when pay is below a certain wage.

Question 22

The mix of the various types of payments that make up total compensation is known as:

A)wage grade
B)pay back
C)pay forms
D)average wage
E)pay level

Question 23

Pay forms refer to the pay relationships among organizations.

Question 24

Geographic barriers to mobility between jobs do not affect the supply of labour.

Question 25

Pay level is the average of the array of rates paid by an employer.

Question 26

A policy to pay below market rates may hinder a firm's ability to attract potential employees.

Question 27

Employers who use no-mix strategy compete by producing goods and services with the highest total compensation possible.

Question 28

Competition in the labour market for people with various skills is a product market factor that shapes external competitiveness.

Question 29

The wage level below which an employee declines a job offer is known as a:

A)living wage level
B)competitive wage level
C)reservation wage level
D)prevailing wage level
E)market wage level

Question 30

The human capital theory assumes that people are paid at the value of their reservation wage.

Question 31

Signalling theory assumes that an employer who combines lower base with high bonuses may be signalling that it wants employees who are risk takers.

Question 32

Marginal product and marginal revenue are directly measurable.

Question 33

The marginal product of labour is the additional output associated with the employment of one additional human resources unit, with other production factors held constant.

Question 34

Given the choice to match, lead, or lag, the most common competitive pay policy is to match rates paid by competitors.

Question 35

The marginal revenue of labour is the additional output associated with the employment of one additional human resources unit.

Question 36

External competitiveness is expressed in practice by:

A)comparing the performance of departments within an organization
B)increasing the compensation differences between employees in an organization
C)encouraging the competitiveness of employees within an organization
D)setting a pay level that is above, below, or equal to competitors'
E)equalizing pay for all employees within the organization, irrespective of seniority

Question 37

Efficiency wage theory says that if a job has negative characteristics, then employers must offer higher wages to compensate for these negative features.

Question 38

Which of the following is a result of following the pay with competition (match)theory?

A)an increase in voluntary turnover
B)a decrease in the pool of qualified applicants
C)an increase in operating expenses
D)an increase in the probability of union-free status
E)an increase in pay-related work stoppages

Question 39

Both pay level and pay forms focus on two objectives: to control costs and to reduce the need for employees.

Question 40

Nature of demand and nature of supply are labour market factors that shape external competitiveness.

Question 41

What is marginal product of labour?

Question 42

Discuss two ways of expressing external competitiveness in practice.

Question 43

What is the prediction of efficiency wage theory?

Question 44

How do product market conditions determine what an organization can afford to pay?

Question 45

What is a lag policy and how does it affect an organization's ability to attract employees?

Question 46

What does compensating differentials theory say?

Question 47

Define the marginal revenue of labour.

Question 48

Discuss competitive pay policies.

Question 49

Discuss the predictions of reservation wage theory and human capital theory.

Question 50

Discuss the predictions of the compensating differentials theory.