Which of the Following Explains Why a Compensation Contract Designed

question 40

Multiple Choice

Which of the following explains why a compensation contract designed to combat employee moral hazard that features strong incentives might be worse than having no incentive scheme at all?

• A) If performance depends on factors other than just the employee's effort, the strong incentives create large costs associated with risk bearing.
• B) Employers are generally pretty skilled at measuring the aspects of job performance in which they are the most interested.
• C) Generally, an employee's effort and ability are the only two determinants of the employee's performance.
• D) This is a trick question; in the presence of moral hazard, even a poorly-designed incentive scheme is better than no incentive scheme.

Recognize the characteristics of progressive, regressive, and proportional tax systems.

Understand how government revenues are generated and how they relate to expenditures in education and defense.

Evaluate the role of taxes in financing public goods and services.

Understand the role and impact of landmark legal decisions, such as Brown v. Board of Education, on civil rights and race relations in the United States.

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Definitions:

Call Bell

A device used by patients, especially in hospitals, to summon healthcare staff for assistance.

Nurse Manager

A registered nurse who assumes leadership and management responsibilities within healthcare settings to oversee nursing staff and ensure quality care.

Secondary Gains

Benefits received indirectly from being ill or in distress, such as attention, sympathy, or avoidance of responsibilities.