As the Year 2000 Approached, Many Organizations Hired "Young" and "Inexperienced

question 64

Multiple Choice

As the year 2000 approached, many organizations hired "young" and "inexperienced" information technology (IT) specialists to help address the Y2K problem. Many of these new hires were paid high compensation that brought them very close to the compensation earned by experienced IT specialists working with these companies. Which of the following can such a practice lead to?

• A) wage inversion
• B) pay equity
• C) wage-rate compression
• D) high turnover across the board

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Definitions:

Efficient Outcome

An economic situation in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Government Intervention

Actions taken by a government to affect the economy, which can include regulation, subsidies, tariffs, and other mechanisms.

Externalities

Economic side effects or consequences of an industrial or commercial activity that affect other parties without being reflected in the costs of the goods or services involved.

Coase Theorem

A principle that asserts if property rights are clearly defined and transaction costs are low, private negotiations will lead to the efficient resolution of disputes over the allocation of resources.