Firms with Internal Labor Markets Have More Flexibility in Deciding

question 7

Multiple Choice

Firms with internal labor markets have more flexibility in deciding the level and time profile of wages because

• A)individuals tend to base their employment decisions on their entire career earnings.
• B)they have to pay the wage rate that equals the marginal revenue product of labor.
• C)compensating wage differentials do not have to be paid in internal job markets.
• D)firm-specific human capital is less costly than general human capital.