“Pay for performance” means that employee compensation closely reflects the amount of value derived from each employee’s effort. In economic terms, the value derived from employee effort is measured by net marginal revenue product. It is the amount of profit generated by the employee, before accounting for employment costs. Holding all else equal, indicate whether each of the following factors would be responsible for increasing or decreasing the amount of money available for employee merit-based pay.
A. Government mandates for employer-provided health insurance
B. Rising productivity due to better worker training
C. Rising employer sales due to falling imports
D. Falling prices for industry output
E. Rising prevalence of uniform employee stock options.

  • CreatedFebruary 13, 2015
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