Under a Tournament Pay Scheme, the Pay Gap Between a Few

question 77

Multiple Choice

Under a tournament pay scheme, the pay gap between a few "winners" (those who receive big promotions) and other employees exceeds the productivity differences between these two groups. The reason firms might use such a scheme is that they

• A) overestimate the productivity of those who receive big promotions and inadvertently pay them "too much."
• B) gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees.
• C) hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages.
• D) hope to raise the productivity of all other workers, who will work harder trying to gain a big promotion.

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Definitions:

Synthetic Steps

The individual chemical reactions or procedures used sequentially in the synthesis of complex organic compounds.

P-Cresol

A type of phenol with the chemical structure C7H8O, characterized by a methyl group attached to the benzene ring of phenol.

Synthetic Steps

The individual reactions or operations required to construct a complex molecule from simpler starting materials in a laboratory setting.

Benzene

An aromatic hydrocarbon with a molecular formula C6H6, characterized by a ring of six carbon atoms with alternating double bonds.