1. Why are product market surveys important to the compensation decision maker? A.

Product markets influence the organizations ability to pay. B. Product elasticity is related to product life cycles. C. Product markets determine supply and demand affecting labor costs. D. Product market surveys reveal wage patterns of other companies in the industry. 2. What three entities have a stake in compensation decisions? A. Organizations, employees, and societies B. Government, organizations, and stockholders C. Managers, supervisors, and employees D. Organizations, competitors, and employees 3. An employee weighs the effort needed against various outcome probabilities before deciding how to act. This thought process is defined by which behavioral theory? A. Reinforcement theory B. Equity theory C. Expectancy theory D. Justice theory 4. What are two compensation issues that organizations must consider in compensation decision making that impact the success or failure of the company? A. Labor costs and pay increases B. Cost-of-living and fairness-in-pay issues C. Labor costs and legal compliance D. Global competition and pay structure 5. When developing a compensation strategy, which three levels of the organization are considered? A. Business, human resources, and employee B. Corporate, business, and functional C. Organizational, departmental, and external D. Ability to pay, internal labor market, and external labor market 6. An employee perceives that the amount of salary determines his status inside the company. Hes concerned with which part of the multidimensional employment exchange? A. Sociological B. Economic C. Psychological D. Political 7. How does compensation strategy influence internal training and development programs? A. By increasing retention and promoting from within B. By ensuring the expected return-on-investment of training dollars C. By evaluating technological advances and requisite skills needed D. By responding to employee opinion surveys 8. Which of the following would be an example of a complex environment? A. Ample labor supply and highly influential labor unions B. Many customers and multiple suppliers C. Low economic and government regulation impacts D. Marketplace uncertainty 9. During which stage of the product life cycle model do organizations focus on cash-flow generation?

A. Growth stage B. Introduction stage C. Maturity stage D. Decline stage 10. Enron executives reaped huge financial rewards from the manipulation of financial data. They defrauded the shareholders. Which wage theory would be most applicable to this event? A. Agency theory C. Bargaining power theory B. Job competition theory C. Bargaining power theory D. Just theory 11. Companies communicate business strategies to employees. Employees are motivated by the access to information and align their performance to the organizations goals. This process is known as A. internal equity. B. a balanced scorecard. C. comprehensive reward plan. D. strategic analysis. 12. John works for a company that pays wages above the labor market. The company assumes that John will be productive because hes being paid well. This assumption is based in part on which theory? A. Marginal productivity theory B. National income theory C. Herzbergs theory D. Marginal revenue productivity theory 13. The organization seeks to align all benefit plans with corporate and business goals. The human resources manager is most likely to A. plan, design, and implement a wide range of benefit plans. B. put employee needs aside. C. communicate benefit plans and corporate goals to employees. D. develop a strategic benefit plan and ensure a return on investment. 14. Organizations set compensation policy to incorporate which two objectives? A. Balance internal and external equity B. Offer competitive wages and salaries and comply with employment laws C. Influence employee behavior and operate within related constraints D. Business necessity and business justification 15. Under the marginal revenue productivity theory, the organizations ability to pay is derived from the revenues after deducting what? A. Cost of sales and stockholder dividends B. Average net revenues (ANR) and fixed profits C. Cost of sales and capital expenditures D. Fixed costs, variable costs, and profits 16. Positive justice theories influence compensation decisions because the research suggests that A. wages are subject to government regulations. B. perceptions of pay equity relate to job satisfaction and job performance. C. applicant and employee perceptions impact hiring, retention, and performance. D. wages must be competitive with other organizations in the labor market.

17. Which situation raises individuals concerns about their earnings relative to their jobs and other positions in the organization? A. Fairness B. Wage compression C. Top of the wage ranges D. External equity 18. Which organizational environment is most conducive to strategic planning? A. Placid randomized B. Placid clustered. C. Turbulent D. Disturbed reactive 19. Marginal physical productivity can be calculated by A. determining average revenue productivity. B. knowing the fixed factor of productivity. C. adding increments of one worker to determine productivity gains. D. measuring the relationship of worker motivation to productivity level. 20. How do theoretical assumptions influence compensation decisions? A. Theories are used by other organizations. B Theories link one or two variables together. C. Theories cant be disproved. D. Theories predict employee behaviors.