Which of the Following Is Not a Characteristic of Performance

question 23

Multiple Choice

Which of the following is not a characteristic of performance based pay?

• A)The slope of the relationship between pay and performance for an employee provides incentives for effort,not the level of pay
• B)Employees will always prefer performance based pay thus aligning principal/agent objectives
• C)The overall value maximizing effort level for an employee occurs when personal marginal benefit equals personal marginal cost
• D)Performance based pay can resolve hidden information problems
• E)Pay contracts approaching 100% commission and negative salaries can occur

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Definitions:

C + I

Represents the sum of consumption (C) and investment (I) in an economy, indicating total expenditures on goods and services.

C + S

Represents the sum of consumption (C) and savings (S), which together account for all disposable income in an economy.

Henry Ford

An American industrialist and founder of the Ford Motor Company, who revolutionized factory production with his assembly-line methods.

Wage-Price Flexibility

The ability of wages and prices to adjust freely in response to changes in supply and demand in the labor and goods markets.