Fred Powell of TruLite makes a verbal pledge to every new employee that he will not lay off employees after they have worked for TruLite for two years and that TruLite will make all promotions internally. Why would Powell make such a pledge? Why is the pledge oral?
What will be an ideal response?
TruLite likely wants to invest in firm-specific human capital. If so, when employees complete their training, they may be handcuffed to the firm in that they are worth more to the firm than the market. To make it worthwhile for employees to stay during the training period, a non-lay-off promise is very attractive. There are other benefits of internal labor markets: TruLite gains valuable information about employees through long-term relationships. TruLite can enhance employee motivation to do good work today in order to be in line for a promotion in the future. Due to the possibility of outside events, it may be difficult to establish a written, explicit contract regarding non-layoffs that covers all contingencies such as hurricanes, severe recession, lawsuits, and so forth. An oral pledge may suffice if Powell has a good reputation for delivering on his promise.
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In contrast to a monopoly which misallocates resources by restricting output and producing too little, government bureaus misallocate resources by _____
a. producing too little b. producing too much c. producing the right amount but charging nothing for the output d. producing zero
Expenditures on a nation's domestic production
a. are less than its domestic production. b. are equal to its domestic production. c. are greater than its domestic production. d. could be less than, equal to, or greater than its domestic production.
Which of the following statements represents a correct and sequentially accurate economic explanation?
A) Wage rates rise, SRAS rises, and the SRAS curve shifts to the left. B) The prices of nonlabor inputs rise, SRAS decreases, and the SRAS curve shifts to the right. C) Labor productivity rises, SRAS increases, and the SRAS curve shifts to the right. D) An adverse supply shock hits, SRAS decreases, and the SRAS curve shifts to the right. E) a and c
Figure 29-1
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In Figure 29-1, which panel shows the effect of an expansionary monetary policy on the interest rate?
A. Panel (A) B. Panel (B) C. Panel (C) D. Panel (D)