Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 19 - Part VI - Earnings and Discrimination - Problems and Applications - Page 411: 7

Answer

a) Merit pay might be desirable since, by its definition, merit pay is to increase the production of teachers. b) Teachers who have taught in the district for some time might object to the merit pay. c) d)

Work Step by Step

c) One issue for merit pay is that of unclear goals to get the merit pay. d) A school district might choose to pay significantly more than the surrounding districts to be a signaling device for the school district to non-district teachers. Also, the increased pay would likely increase the opportunity cost for teachers already in the district.
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