According to Management Consultant Peter Drucker

question 2

Multiple Choice

According to management consultant Peter Drucker:

• A)the annual pay for top executives should include a small guaranteed salary but should include a very large bonus in years where the firm earns higher profits than competitors.
• B)CEOs should not earn much more than 20 times the earnings of their companies' lowest paid employees.
• C)top executives are entitled to any level of pay they can negotiate with their board of directors.
• D)all bonuses paid to CEOs should be tied to long-run increases in market share.

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Definitions:

Marginal Productivity

Marginal productivity refers to the additional output produced as a result of adding one more unit of a specific input, keeping all other inputs constant.

Fixed-Proportion

A production scenario where the input proportions cannot be changed; each unit of output requires the same ratio of inputs.

Production System

The combination of inputs, processes, and outputs that creates goods or services in an organized manner.

Labor Inputs

The quantity of labor used in the production process, often measured in hours worked or number of employees.