Which of the following statements best defines the economics of the so-called superstar effect in the labor market?
a. This effect will result in cases in which individuals with large productivity differences receive vastly different compensation.
b. This effect occurs in cases in which individuals with small productivity differences receive very small differences in compensation.
c. This effect occurs when the firm hiring the superstar simply does not understand the term marginal-revenue product.
d. This effect occurs in cases in which individuals with small productivity differences receive vastly different compensation.
e. This effect usually occurs in industries in which a labor union has far-reaching powers.
d
You might also like to view...
When yield curves are steeply upward sloping
A) long-term interest rates are above short-term interest rates. B) short-term interest rates are above long-term interest rates. C) short-term interest rates are about the same as long-term interest rates. D) medium-term interest rates are above both short-term and long-term interest rates.
Data indicate that the economy's response to monetary policy became noticeably weaker and more stretched out during
A) 1961-75. B) 1976-90. C) 1991-2007. D) None of the above. The response has grown stronger and shorter.
If economists are making the assumption that business people try to maximize profits, the best way to determine whether this assumption is useful or not is to
A) see whether it generates accurate predictions about the choices of business people. B) ask business people whether it is true or not. C) find out whether U.S. businesses are more profitable than European businesses. D) take a survey of people and see if they agree with this assumption.
Market power refers to the ability of a firm to set its product price
Indicate whether the statement is true or false