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A Personnel Committee Is Evaluating Professors

question 24

Multiple Choice

A personnel committee is evaluating professors. Professor X has the highest student ratings in the department. One of the committee members suggests that Professor X should receive the highest merit raise in the department. Another committee member raises an objection. She states, "Professor X scores are high, compared to other professors, because over half of the students drop out of Professor X's courses, not because Professor X is an excellent professor." What threat to the validity of the conclusion that Professor X is an excellent professor is the committee member describing?

Evaluate the financial implications of installing safety equipment in the workplace.

Assess the effects of various types of insurance policies on individual behavior.

Understand the role of incentives and monitoring in mitigating moral hazard.

Recognize the importance of screening and selection processes to prevent shirking.

Definitions:

Variable Expenses

Expenses that directly correlate and adjust with the alterations in the amount of activity or the quantity of production.

Fixed Expenses

These are costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance.

Margin of Safety

The difference between actual sales and sales at the breakeven point, indicating how much sales can decline before a loss occurs.

Variable Expenses

Costs that change in proportion to the activity or volume of a business operation.