Why, in the labor market, are contracts often designed to include a variable salary component that is tied to some measure of performance?
A. Most people are risk-averse and thus variability in their compensation leads to higher total utility.
B. These contracts tend to attract employees with the lowest probability of switching jobs.
C. Firms use such contracts to differentiate between high- and low-quality workers.
D. Such contracts are considered the fairest to employees under fair labor standard laws.
Answer: C
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Suppose, as a result of various dynamic factors associated with exposure to international competition, Albania's economy grew, and is now represented by the rightmost production possibility frontier in the figure above
If its point of production with trade was point c, would you consider this growth to be export-biased or import biased? If Albania were a large country with respect to the world trade of A and B, how would this growth affect Albania's terms of trade? Its real income?
An increase in government spending
A) increases consumption and output. B) increases consumption, decreases output. C) decreases consumption, increases output. D) decreases consumption and output.
The problem arising in the used car market can be alleviated by
A. providing buyers with more complete information on the condition of a used car. B. sellers offering warranties. C. having third parties certify the condition of a used car. D. All of these statements are true.
The labor demand curve:
A. is provided by firms who want to hire workers at each given wage. B. is made up of workers who want to work for firms at each given wage. C. shows number of workers who are willing and able to work at higher wages. D. shows that the number of people who want to work increases as the wage increases.