What Prevents a Firm from Offering a Delayed-Compensation Scheme to Its

question 22

Multiple Choice

What prevents a firm from offering a delayed-compensation scheme to its employees and then firing each worker when the worker's wage exceeds his or her value of marginal product?

• A) Firms that offer delayed-compensation schemes are legally barred from firing workers.
• B) Profits would increase by allowing the worker to continue on.
• C) The worker will have already retired by the time the worker's value of marginal product exceeds his or her wage.
• D) Profits are insensitive to when the worker quits his job.
• E) The firm would lose the trust of the workers, and new workers would not accept the payment scheme.

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