Pay Rates Within a Firm Seem to Show Less Variation

question 13

Multiple Choice

Pay rates within a firm seem to show less variation than marginal productivity rate differences. This is because

• A)firms cannot measure marginal productivity accurately.
• B)firms compensate their high producers with non-monetary perks.
• C)social norms do not allow employers to pay high productivity wages.
• D)as much as possible firms try to pay employees the same rate for fairness reasons.

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Definitions:

Internal Customers

Employees or departments within an organization who depend on the support or services provided by other parts of the company to fulfill their job duties.

Workflow

The sequence of industrial, administrative, or other processes through which a piece of work passes from initiation to completion.

Manufacture of a Product

The process of producing goods through the combination of labor, machinery, and processing or assembly operations.

Competitive Advantage

A condition that enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, resulting in benefits such as higher sales or margins and/or a larger market share.