Question

A business owner must decide whether to improve the benefits she offers her

employees. She calculates that improving benefits will cost the company an
extra $1,000 per employee each year. This could prevent her from hiring as
many new employees as she would like over the next few years. On the other
hand, better benefits will help her hire more qualified employees who will stay
with the company for longer.
The potential value of hiring more qualified employees at the cost of more
expensive benefits is an example of a(n)
A. margin
B. scarcity
C. trade-off
D. incentive

Answer 1

Answer: C. trade-off

Step-by-step explanation:

If the business owner hires more qualified employees at the cost of paying more for expensive benefits, this is considered a trade-off because she is trading higher costs for more quality.

Trade-offs arise as a result of scarcity. Since resources (money for benefits in this case) are limited, the business owner would have to trade one thing for another instead of being able to get everything she wants. The thing she will exchange will be more expensive benefits for better quality employees.