PRINCIPLES OF MICROECONOMICS LOOSE LEAF
12th Edition
ISBN: 9780134081083
Author: CASE
Publisher: PEARSON
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Chapter 10, Problem 2.3P
To determine
Compensation to employees.
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According to the Economics Policy Institute (Mishel and Wolfe, 2019) CEO pay has grown 940% since 1978 while the compensation of the average worker has only risen 12%. While you can easily find sources that provide statistics that conflict with these numbers, you would be hard pressed to find any credible source that refutes the idea that the rate of pay of CEO’s and other upper-level managers has not dramatically increased relative to an organization’s lower-level employees in just about any 10 or more year period over the past 60 years.
In the world of Adam Smith, the “invisible hand” of the free market capitalistic model would address inequities/out of balances. Are the forces represented by the “invisible hand” working? Why or why not?
Is there an ethical dimension to the discussion of upper-level manager compensation? Why or why not?
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In 2013, France's labor unions won a case against Sephora to prevent the retailer from staying open late and forcing its workers to work “antisocial hours.” The cosmetic store does about 20 percent of its business after 9 p.m., and the 50 sales staff who work the late shift are paid an hourly rate that is 25 percent higher than the rate paid to workers on the day shift. Many of the late-hour workers are students or part-time workers, who are put out of work by these new laws.
Forcing the retailer to close earlier forces the store's assets, such as the building and merchandise, to be moved from lower or higher valued activities to higher or lower valued activities.
True or False: In order to profit from this law, an individual could purchase Sephora products during the day and sell them at a higher price during normal store hours.
In 2011, Kevin Jones, Texas Tigers quarterback, agreed to an eight-year, $50 million contract that at the time made him the highest-paid player in professional football history. The contract included a signing bonus of $11 million and called for annual salaries of $2.5 million in 2011, $1.75 million in 2012, $4.15 million in 2013, $4.90 million in 2014, $5.25 million in 2015, $6.2 million in 2016, $6.75 million in 2017, and $7.5 million in 2018. The $11 million signing bonus was prorated over the course of the contract so that an additional $1.375 million was paid each year over the eight-year contract period. With the salary paid at the beginning of each season, what is the worth of his contract at an interest rate of 6%?
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PRINCIPLES OF MICROECONOMICS LOOSE LEAF
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