What factors explain why high-skilled workers are paid more than low-skilled workers?
What will be an ideal response?
High-skilled workers have a higher value of marginal product than that of low-skilled workers. This fact causes the demand for high-skilled labor to exceed that of low-skilled labor and is one reason why high-skilled workers' wages are higher than low-skilled workers' wages. In addition, high-skilled workers require compensation for having acquired the skill. Thus, the supply of high-skilled labor is less than the supply of low-skilled labor, which also causes the wages paid high-skilled workers to exceed those paid low-skilled labor.
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If a firm finds itself operating in Stage I, it implies that
A) variable inputs are extremely expensive. B) it overinvested in fixed capacity. C) it underinvested in fixed capacity. D) fixed inputs are extremely expensive.
All of the following describe the conflict between divisions EXCEPT
a. some activities across divisions benefit from coordination b. managers of profit centers care too little about the effects of their decisions on other divisions c. corporate executives reward managers who are able to become more efficient d. corporate executives cannot tell when one divisional manager's decision is appropriate or not
What happens when the interest rate on newly issued bonds increases?
a. The price of previously issued bonds with the lower rate decreases but still is higher than its face value. b. The price of previously issued bonds with the lower rate does not change as the face value has not changed. c. The price of previously issued bonds with the lower rate decreases to less than its face value. d. The price of previously issued bonds with the lower rate increases to more than its face value.
Refer to Figure 10.3. If full-employment GDP is $600 billion and the economy is on AD1,
A. An inflationary gap exists, and AD must increase by more than $100 billion to eliminate it. B. A recessionary gap exists, and AD must increase by less than $100 billion to eliminate it. C. A recessionary gap exists, and AD must increase by more than $100 billion to eliminate it. D. An inflationary gap exists, and AD must increase by $100 billion to eliminate it.