John Has an Economics Test Tomorrow

question 39

Multiple Choice

John has an economics test tomorrow. He must study and has planned the rest of his day so that he can fit some study time in. He has decided to go to the gym and then study for several hours. Which of the following statements is true?

• A) John did not use the economic way of thinking because his decision on how to allocate his time did not involve money.
• B) John's decision on how to allocate his time is inconsistent with the rationality assumption since he has decided to go to the gym.
• C) John's decision on how to allocate his time is consistent with the rationality assumption since the decision is intended to make him better off.
• D) John's decision does not involve his pursuit of self-interest.

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Definitions:

Skill-Based Pay

A compensation system that rewards employees for their range of skills or depth of knowledge, rather than their job title.

Skill-Based Pay

A compensation system where employees are paid based on the skills, knowledge, and abilities they possess rather than their job title or position.

Performance-Based Pay

A compensation system where an employee's pay is directly linked to their performance or achievements, incentivizing efficiency and productivity.

Job Content-Based Pay

A compensation strategy where wages are determined by the nature, complexity, and responsibility level of the work performed, rather than by the individual characteristics of the employee.