If a Firm Frequently Changes the Basis of Its Pay-For-Performance

question 89

Multiple Choice

If a firm frequently changes the basis of its pay-for-performance system,it will most likely:

• A) diminish its credibility gap.
• B) violate its psychological contract with employees.
• C) generate fear among employees due to a lack of control.
• D) increase employees' intrinsic drive to perform beyond expectations.

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Definitions:

Total Revenue

The gross revenue of a company, being the entire sum of income from goods or services sold, prior to the deduction of any costs.

Marginal Cost

The extra expense associated with the production of an additional unit of a product or service.

Profit-Maximizing Price

The price at which a firm can maximize its profits, determined by the market structure and demand elasticity.

Profit-Maximizing Price

The price at which a company can sell its product to achieve the maximum possible profit.