Which Would Be an Example of a Negative Side Effect

question 102

Multiple Choice

Which would be an example of a negative side effect of pay-for-performance plans?

• A) Profit sharing plans will tend to decrease the "free-ride" that some workers get by being part of a team.
• B) Employers get greater effort from workers by paying them a relatively high, above-equilibrium wage.
• C) Workers have to take additional schooling to learn skills that will enable them to keep their jobs.
• D) An increase in production from piece work can result in a decline in product quality.

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Definitions:

Product Market

The marketplace where final goods or services are offered to consumers, businesses, and other entities by producers and suppliers.

Resource Market

A market where resources (e.g., labor, capital, land) are bought and sold, often determining the distribution of income in an economy.

Imperfectly Competitive

Imperfectly Competitive describes markets where the assumptions of perfect competition, such as homogeneous products and many buyers and sellers, are not fully met, resulting in individual firms having some control over price.

Labor Demand Data

Information representing the quantity of labor that employers are willing and able to hire at different wage rates.