If a Prospective Employee Is Not Offered His/her Reservation Utility

question 32

Multiple Choice

If a prospective employee is not offered his/her reservation utility or reservation wage,then he/she will:

• A)tend to look for another job or withdraw from the labor market.
• B)seek a larger fringe benefit package.
• C)use the job as the basis for a career,assuming that wages will increase beyond the marginal revenue product over time.
• D)accept the job because a wage below the reservation utility is very attractive.

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Definitions:

Goodwill

An intangible asset that arises when a company acquires another business for more than the value of its tangible and identifiable intangible assets.

Outstanding Voting Shares

The total number of shares of a corporation's stock that are currently owned by shareholders and have the right to vote.

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, neither under compulsion to act.

Equity Method

An accounting technique used by a company to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor’s proportion of net assets in the investee.