1. If a prospective employee is not offered his/her reservation utility or reservation wage, then he/she will:

A. tend to look for another job or withdraw from the labor market.

B. seek a larger fringe benefit package.

C. use the job as the basis for a career, assuming that wages will increase beyond the marginal revenue product over time.

D. accept the job because a wage below the reservation utility is very attractive.

2. There are several assumptions that are the basis of the operation of the benchmark competitive labor market. Which of the following is not one of these assumptions?

A. Wage rates are costless observable.

B. All jobs are identical.

C. There are no long-term contracts.

D. Compensation is made up of wages and benefits.

3. In the basic competitive model of labor markets, we see that:

A. individual firms and workers can exert a lot of influence over the wage rate.

B. there are only long-term contracts.

C. jobs are not identical to each other.

D. individual firms and workers have no control over the wage rate paid and received.

4. In the basic competitive model of labor markets, it is assumed that:

A. individuals are not identical in training and skills, and jobs are not identical.

B. not all individuals are identical in training and skills, but all jobs are identical.

C. individuals are identical in training and skills, but not all jobs are identical.

D. individuals are identical in training and skills, and all jobs are identical.

5. In the basic competitive model of labor markets we assume that:

A. firms have discretion over the wages they pay to their employees.

B. market wage rates are not costless observable.

C. all compensation is monetary and there are some fringe benefits included.

D. all compensation is monetary and there are no fringe benefits.

16. In the benchmark competitive case, the firm will expand the hiring of employees until the marginal revenue product is:

A. less than the market wage rate.

B. equal to the market wage rate.

C. greater than the market wage rate.

D. the square of the market wage rate.

7. If a firm in a competitive labor market offers less than the market wage rate, it will:

A. be able to attract a large number of employees because the marginal revenue product is low.

B. find that it has broken a federal wage law.

C. attract too few employees.

D. find that the supply is greater than the demand.

8. Human capital is a term that characterizes:

A. the number of workers in a company who are productive.

B. firms that sell their products to customers directly.

C. individuals who buy skills from the companies they work for.

D. individuals with a set of skills that they rent to employers.

9. The value of human capital is determined by:

A. a special team of experts in each college and university.

B. a ranking system of the relative value of different types of education to society.

C. the forces of supply and demand for human capital in the market.

D. an investment board at the New York Stock Exchange.

10. Which of the following is a distinction between general and specific human capital?

A. General human capital consists of training and education that is valued by different firms, whereas specific human capital is more valuable to the current employer.

B. General human capital enables workers to earn compensating wage differentials, whereas workers with specific human capital earn the competitive wage rate.

C. General human capital leads to higher labor costs, whereas specific human capital leads to higher turnover costs.

D. General human capital leads to self-selection on the basis of risk preference, whereas specific human capital leads to the adverse selection problem.

11. Dan Uno sky manages a production group in a PC repair shop. He has noticed that the speed of repair is based on each worker doing one task. However, if an employee is out sick, then the entire repair process slows down. This is an example of:

A. coordination costs.

B. the trade-off between low cross-training costs and reduced flexibility of the employees.

C. the absolute need for every employee to be trained in all aspects of PC repair.

D. managerial ineptitude.

12. Specialized task assignment's greatest cost is ignoring the foregone ______ across tasks.

A. comparative advantage

B. flexibility

C. complementarities

D. lower cross-training costs

13. Two tasks are said to be ______ if performing more of one task increases the benefit or reduces the cost of performing another task.

A. substitutes

B. complements

C. bundled

D. flexible

14. When a worker specializes in one task, he focuses on that one function in the production process, ignoring the whole system. This is likely to:

A. increase the cross-training costs.

B. eliminate trade-offs since only one task is undertaken by each employee.

C. lead to greater complementarily between one task and another.

D. result in functional myopia that reduces overall productivity.

15. The most famous story about organizing tasks into jobs comes from Adam Smith's tale of the pin factory. In that story, he argues that:

A. specialization of jobs into simple tasks increases productivity.

B. cross-training is critical for productivity.

C. coordination is the biggest problem for factory efficiency.

D. one worker should be assigned all the tasks in pin construction.

16. Dan Uno sky assigns his computer repairers four tasks: customer service, replacement of broken parts, clean-up of equipment, and sale of used equipment to customers. If the company provides a 10% commission for all sales made by employees, then:

A. employees will clearly emphasize the clean-up task.

B. employees may ignore other tasks when faced with a potential sale.

C. replacement of broken parts will clearly be favored by employees.

D. the entire production process will be speeded up by the sales incentive.

17. The choice between specialized and broad task assignments depends on:

A. politicking and other influencing activities carried on within an organization.

B. the principle of separation of decision management and control.

C. the principle of comparative advantage to increase the output level.

D. technological, informational, and incentive issues.

Topic: Bundling Tasks into Jobs

18. Grouping people together within a subunit is likely to:

A. lower the communication and coordination costs within the subunit.

B. increase the communication and coordination costs within the subunit.

C. lead to empowerment.

D. lead to boundary setting.

19. Which of the following is not a benefit of the unitary form (U form) of an organization?

A. Improved coordination among functional specialists

B. Higher level of functional expertise

C. Well-defined promotion path

D. Opportunity costs of the time of senior management

20. A disadvantage associated with grouping jobs on the basis of functional specialty is that:

A. managers rely on implicit understanding and informal relationships.

B. managers tend to ignore the interdependencies among units that might lower a firm’s value.

C. employees concentrate more on achieving departmental goals rather than customer satisfaction.

D. employees have to seek ratification from managers for initiation and implementation of decisions.