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46) Deed Manufacturers, a heavy machinery company, has employees belonging to the age
group of 17 to 30. Todd, a 17-year-old, is prohibited from working with heavy machinery tools.
Instead, he works in the mail room. Under the laws governing Fair Labor Standards Act (FLSA),
which statement justifies the organization's decision to forbid Todd from doing heavy machinery
work?
A) Todd cannot be employed in hazardous occupations because he is 17 years old.
B) Todd is expected to work in a safe environment because he is male.
C) Todd is not a U.S. citizen, therefore he is prohibited from working in a hazardous
environment.
D) Todd has not yet completed college, therefore he should only be given administrative duties.
E) Todd comes from an economically weaker background, therefore he is expected to perform
clerical duties.
47) GR Designs, a manufacturing company, hires employees ranging in age from 14 to 25.
Which practice by GR would ensure that it complies with child labor laws?
A) The employees are all paid the same amount.
B) The teenage employees earn a training wage for the first year.
C) Only the workers over 20 earn overtime pay.
D) All the employees have part-time schedules.
E) The employees aged 14 and 15 work only in office jobs and for limited time periods.
48) Under the FLSA, which statement is true of child labor?
A) Children aged 18 and 19 may not be employed in hazardous occupations defined by the
Department of Labor.
B) Children aged 14 and 15 may not be employed in any work associated with interstate
commerce.
C) The FLSA's restrictions on the use of child labor apply to children younger than 18.
D) Children aged 18 and 19 may work only outside school hours, in jobs defined as
nonhazardous, and for limited time periods.
E) All the states have laws requiring working papers or work permits for minors.
49) Which statement is true according to the Davis-Bacon Act of 1931 and the Walsh-Healy
Public Contracts Act of 1936?
A) Under these laws, individuals aged 18 and 19 may not be employed in hazardous occupations
defined by the Department of Labor.
B) Federal contractors must pay their employees at rates at least equal to the prevailing wages in
the area.
C) The overtime rate applies to the hours worked beyond 45 in one week.
D) Employers must pay a training wage to workers under the age of 15 for a period of up to 60
days.
E) Organizations can defend themselves against claims of discrimination by showing that they
pay the going market rate.
50) Quey Inc., a construction company, receives more than $2,000 in federal money. The
company pays its employees at rates at least equal to the prevailing wages in the area. The
calculation of prevailing rates by the company is based on 30 percent of the local labor force. In
this case, which law does the company comply with?
A) the Lloyd-La Follette Act of 1912
B) the Smith-Connally Act of 1943
C) the Julie Jargon Act of 1940 and the Eric Morath Act of 1945
D) the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936
E) the Humphrey-Hawkins Full Employment Act
51) Mighty Mixers, a cement company, receives more than $2,000 in federal money. The
company hires employees belonging to the age group of 25 to 40. Soon after, Mighty Mixers is
charged for violation of law under the Davis-Bacon Act of 1931 and the Walsh-Healy Public
Contracts Act of 1936. Which of the following would most likely explain the reason for the
company being sued?
A) The employees of the company are not being paid at rates at least equal to the prevailing
wages in the area.
B) Cement industry employees are being paid only 15 percent above the minimum wage.
C) The company hired employees belonging to the age group of 25 to 40, and they are being
employed in hazardous environments.
D) Individuals eligible for overtime are being paid at one and a half times the employee's regular
pay rate.
E) Employees below the age of 25 are not being hired by the company.
52) The Walsh-Healy Public Contracts Act of 1936
A) requires that a lower "training wage" be paid to workers under the age of 20 for a period of up
to 90 days.
B) mandates that employers pay higher wages for overtime, defined as hours worked beyond 40
hours per week.
C) covers construction contractors that receive more than $2,000 in federal money.
D) requires general contractors performing services on prime contracts in excess of $2,500 to
pay service employees in various classes no less than the prevailing local wage rates.
E) covers all government contractors receiving $10,000 or more in federal funds.
53) The pay ration reporting policy, as part of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, requires that companies report the ratio of their average
worker's pay to that of
A) other workers in the same industry.
B) minimum wage.
C) their competitor's average pay.
D) exempt employees.
E) the CEO.
54) An organization's choices about ________ are limited by its response to the economic forces
of product markets and labor markets.
A) pay rates
B) pay structure
C) pay differentials
D) pay grades
E) pay ranges
55) Which statement is true about a product market?
A) The cost of labor does not affect the product market because it is an insignificant part of an
organization's costs.
B) Product-market considerations are of particular concern to a company when its customers
place greater importance on product rather than price.
C) Organizations in a product market are competing to serve the same customers.
D) Product markets typically place a lower limit on the pay an organization will offer its
employees.
E) Organizations in a product market must increase the cost of labor every quarter.
56) Organizations under pressure to cut labor costs may respond by
A) retaining staff levels.
B) providing pay increases to prevent employee turnover.
C) postponing hiring decisions.
D) requiring employees to bear less of the cost of benefits such as insurance premiums.
E) avoiding automation of routine tasks.
57) Which statement is true about labor markets?
A) Organizations compete to sell labor in the labor market.
B) Competition for labor establishes the minimum an organization must pay to hire an employee
for a particular job.
C) Changes in the CPI do not affect the labor market.
D) Cost-of-living considerations have little impact on labor-market rates.
E) An organization's competitors in labor markets only include companies with different
products.
58) Rashana is a human resource specialist at Piper Co., a business consulting company. To
support human resource planning, Rashana monitors trends in the Consumer Price Index. In
recent months, the CPI has been rising at an increasing rate. What can Rashana predict based on
this information?
A) A rising cost of living will lead workers in the labor market to seek higher pay.
B) A falling cost of living will cause workers to leave the labor market.
C) A rise in employment costs will lead companies to demand more labor.
D) Competitors in Piper Co.'s product markets will hold wages steady.
E) Uncertainty about prices will cause workers to accept lower-paying jobs.
59) Which statement is true about the Consumer Price Index (CPI)?
A) The CPI helps organizations in the product markets decide an upper limit on the pay they will
offer.
B) Following and studying changes in the CPI helps employers prepare for changes in the
demands of the labor market.
C) The CPI helps organizations lure top-quality employees.
D) The CPI helps control labor markets' demand for pay increases.
E) The CPI helps organizations to compete with companies in other industries that hire similar
employees.
60) Although labor and product markets limit organizations' choices about pay levels, there is a
range within which organizations can make decisions. The size of this range depends on the
A) minimum and maximum wages fixed by the government.
B) pay of federal contractors.
C) organization's competitive environment.
D) quality of employees.
E) organization's global reputation.
61) Economic theory holds that the most profitable pay level, all things being equal, would be at
the
A) lowest possible level.
B) market rate.
C) highest possible level.
D) mid-range level.
E) CPI rate.
62) Keegan, the human resource manager at R&S Inc., is advising the company's business
executives that paying more for labor than competitors can support the company's strategy.
Under what conditions might Keegan's idea be most valid?
A) R&S pays more to attract top talent, applying employees' knowledge to be more innovative
than competitors.
B) R&S intends to charge more than competitors for the same kinds of products.
C) R&S hopes other companies will eventually match R&S's pay scale.
D) Labor costs are a large part of R&S's total costs.
E) R&S is developing a low-price strategy that will generate more sales.
63) Abbel Inc., a manufacturing company, believes that pay is an investment that can generate
returns in attracting, retaining, and motivating a high-quality workforce. In this case, which
statement is true about Abbel Inc.?
A) It considers its employees as resources.
B) It gives the least importance to profits.
C) It is a customer-friendly firm.
D) It tries to keep its labor costs minimal.
E) It helps employees find higher-paying jobs.
64) Pay policies are one of the most important human resource tools for
A) reducing competition in the product market.
B) automating routine activities.
C) persuading customers that high quality is worth a premium price.
D) making decisions about product pricing.
E) encouraging desired employee behaviors.
65) Gilly Brothers, an insurance company, incurred losses of about $100 million. To analyze its
losses and to overcome them, the company began comparing its own practices against those of
its successful competitors. In this scenario, which procedure is adopted by Gilly Brothers?
A) benchmarking
B) job evaluation
C) regression analysis
D) delayering
E) pay structuring
66) Which U.S. organization conducts an ongoing National Compensation Survey measuring
wages, salaries, and benefits paid to the nation's employees?
A) Bureau of Labor Statistics
B) Society for Human Resource Management
C) American Management Association
D) AFL-CIO
E) Bureau of Economic Analysis
67) According to ________, people measure outcomes such as pay in terms of their inputs.
A) expectancy theory
B) equity theory
C) retributive justice theory
D) progressive justice theory
E) economic theory
68) Employees' conclusions about equity depend on
A) what they choose as a standard of comparison.
B) how much money they think the company CEO makes.
C) what level of income they believe they should be at by this point in their lives.
D) what benefits they receive.
E) if they think they can bargain for a higher rate of pay.
69) What is an advantage of a two-tier wage system?
A) It helps move jobs out of the country.
B) It helps eliminate jobs without any legal hassles.
C) It helps reduce labor costs without cutting employees' existing salaries.
D) It helps provide more pay to new employees.
E) It provides better standards for benchmarking.
70) Research on the effects of two-tier wage plans found that
A) lower-paid employees were less satisfied on average than higher-paid employees.
B) lower-paid employees were more satisfied on average than higher-paid employees because
they made comparisons with lower-paying alternatives for themselves.
C) lower-paid employees expected to be promoted into the second tier in a short time span.
D) equity theory did not come into play for either group and neither group experienced more or
less job satisfaction than the other.
E) both existing employees and new employees have a similar pay rate.
71) Some employees at Opal Coin, a clothing manufacturer, investigate pay rates on Salary.com
and learn that Opal Coin has been paying them significantly more than the national average for
their jobs. In this case, what is the most likely reaction of the employees at Opal Coin?
A) The employees will conclude that there must be regional differences in pay.
B) The employees will be motivated to work much harder.
C) The employees will find their jobs less challenging.
D) The employees will find a way to increase their outcomes by stealing.
E) The employees' attitudes and behaviors will continue unchanged.
72) Which statement is true of compensable factors?
A) They are generally statistically derived.
B) They are the characteristics of a job that a firm values and chooses to pay for.
C) They refer to the factors that are important for setting the two-tier wage system.
D) They describe all aspects of the jobs being evaluated.
E) They are used to ensure equity among employees.
73) A pay policy line
A) shows the mathematical relationship between the minimum pay and the maximum pay in an
organization.
B) can be generated using a statistical method called regression analysis.
C) requires market-pay-rate data on all jobs in the organization.
D) can seldom provide information on the market pay level for a given job evaluation.
E) reflects the pay structure in the market, which always matches rates in the organization.
74) What is a drawback of setting pay rates based strictly on a pay policy line?
A) It increases the administrative burden of managing the compensation system.
B) Employees have difficulty interpreting regression analysis.
C) The estimated pay for a job may not reflect conditions in the labor market.
D) It increases the costs of surveying the market.
E) It groups jobs, which will result in rates of pay for individual jobs that precisely match the
levels specified by the market.
75) Malto Inc., a manufacturing company, bases employees' pay entirely on market forces. In
this case, what is a practical drawback faced by the company?
A) Employees might conclude that the pay rates are unfair.
B) Supervisors of the company will expect to receive lower pay because of less responsibility.
C) The highly paid employees will likely be dissatisfied because of more work.
D) The managers will participate in rotation of responsibilities because they receive lower pay.
E) All employees will be categorized as exempt employees.
76) What is a set of possible pay rates defined by a minimum, maximum, and midpoint of pay
for employees holding a particular job?
A) pay grade
B) pay range
C) pay differential
D) compa-ratio
E) compensation differential
77) Pay ranges are most common for
A) white-collar jobs.
B) piece-rate jobs.
C) jobs that are covered by union contracts.
D) automotive workers.
E) construction workers.
