James Is a Salaried Employee Whose Job Is to Proofread

question 76

Multiple Choice

James is a salaried employee whose job is to proofread legal documents. He discovers that he is paid substantially more than his colleagues, even though their jobs and performances are very similar. What is likely to be his reaction to this discovery according to the equity theory?

• A) He will feel a sense of achievement.
• B) He will expect to be promoted shortly.
• C) He will increase the quantity or the quality of documents he proofreads.
• D) He will seek a position within the company commensurate with his pay.
• E) He will begin to look for a better position outside of the company.

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Definitions:

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period of time.

Dividend-payout Ratio

A financial ratio that shows the percentage of a company's earnings paid to shareholders in the form of dividends, reflecting a company's dividend policy.

Anticipated Growth Rate

The expected rate at which a company, asset, or economy is predicted to grow over a certain period of time.

Free Cash Flow

The amount of cash generated by a company after accounting for operating expenses and capital expenditures.