If All Issues of Effort,output,and Pay Are Fully Observable and Contactable

question 18

Multiple Choice

If all issues of effort,output,and pay are fully observable and contactable between an owner and an employee,then:

• A)incentive conflicts can be eliminated.
• B)incentive conflicts remain intractable.
• C)the utility of the employee is unimportant to the outcome.
• D)revenues of the firm are independent of employee effort.

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Definitions:

Plight

A dangerous, difficult, or otherwise unfortunate situation.

Individual Inequity

The unequal distribution of resources, opportunities, and treatment experienced by individuals based on various personal attributes.

Stratification

The hierarchical arrangement of individuals or groups in society on the basis of social, economic, or other distinctions.

Noneconomic Dimension

Aspects of life or society not directly related to economic activities, including cultural, social, and emotional factors.