Cheap Talk Works at Placing Workers in the Right Job

question 96

Multiple Choice

Cheap talk works at placing workers in the right job as long as

• A) the interests of the worker and the firm coincide.
• B) all workers want the most demanding jobs regardless of their abilities.
• C) workers have different ability levels that are unknown to firms.
• D) firms are not profit maximizers.

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Definitions:

Binding Minimum Wage

A minimum wage rate that is set above the equilibrium wage in the labor market, causing potential unemployment by forcing employers to pay more than the market rate for labor.

Incomes

Earnings received by individuals or entities for their labor, investments, or participation in business activities, often measured on a regular basis like monthly or yearly.

Minimum-Wage Laws

Legislation that sets the lowest hourly wage rate that an employer can legally pay to workers, aiming to ensure a minimum standard of living for employees.

Surplus Of Labor

The situation where the supply of labor exceeds the demand for it, often leading to unemployment or underemployment.