D. Statement 1: Every type of pay scheme has some component of incentive pay, but some have much more significant incentive pay components.

Statement 2: The most profitable level of effort by employees can be found by getting them to work for as long as the direct contribution to the firm's revenue is larger than the compensating differential that must be paid to them for the unpleasantness of the extra effort.

Both statements are true

Both statements are false.

Statement 2 is true, and 1 is false

Statement 1 is true, but 2 is false

B. Statement 1: A firm paying its employees a little more than the equilibrium wage rate will find that employees stay at the firm for much of their careers, but there will be very little firm specific human capital acquired by the employees.

Statement 2: Firms using internal labor markets typically pay their employees more than they could get elsewhere for their entire careers.

Both statements are false.

Statement 2 is true, and 1 is false

Both statements are true

Statement 1 is true, but 2 is false