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The Basic Problem with Using a Ranking Method for Performance

question 48

True/False

The basic problem with using a ranking method for performance appraisals is not identifying the extreme good and bad performers but differentiating meaningfully between the others.


Definitions:

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Short-run Marginal Cost Curve

A curve that shows the change in total cost associated with producing one more unit of output in the short term.

Diminishing Marginal Returns

A principle that states as additional units of a variable input are added to fixed inputs, the additional output produced from each new unit eventually decreases.

Variable Resources

Inputs that change in quantity with levels of production, such as raw materials and labor.

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