What Is One Potential Problem with Offering a Choice of Contracts

question 105

Multiple Choice

What is one potential problem with offering a choice of contracts to two different employees?

• A) If Employee A is paid more than Employee B, Employee A might sue for discrimination.
• B) Employee A might be paid less than Employee B, proving statistical discrimination.
• C) The two employees might compare salaries without comparing risk-preferences, thereby running the risk of jealousy or claims of discrimination.
• D) The two employees might compare risk preferences without comparing salaries, thereby running the risk of jealousy or claims of discrimination.

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Definitions:

Surfactant

A substance that reduces surface tension, allowing for the easier exchange of gases in the lungs and preventing alveolar collapse.

Manufacturing Firms

Companies that produce and sell goods using raw materials, labor, and machinery.

Computer Chips

Small semiconductor devices that contain integrated circuits used to perform computing tasks.

Capital

Assets used in the production of goods and services, including physical tools, machinery, buildings, as well as intangible items like software or intellectual property.