Foundations of Business (MindTap Course List)
Foundations of Business (MindTap Course List)
6th Edition
ISBN: 9781337386920
Author: William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher: Cengage Learning
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Chapter 10, Problem 4DQ
Summary Introduction

To determine: The ways an employee determine whether an individual is being treated equitably according to equity theory.

Introduction: Equity theory is situated in the possibility that people are persuaded by decency, and on if they recognize disparities in the input or output proportions of themselves and their referent gathering, they will look to modify their contribution to achieve their apparent equity.

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Base Ethical dilemma teaser. ABC Plastics Co. contracts with NASA to manufacture component parts used in communications satellites. NASA reimburses ABC on the basis of the actual manufacturing costs it incurs, plus a fixed percentage. Prior to being awarded a contract, ABC must submit a bit that details the estimated costs associated with each project. An examination of ABC's job cost sheets reveals that actual costs consistently exceed cost estimates quoted during the bidding process. As a consequence, NASA ends up paying considerably more than the bids ABC submits. An ABC representative was recently quoted as saying, "We really aren't overcharging NASA for the work that we do. The actual costs shown on our job cost sheets seem high only because we are forced to understate our bid estimates in order to be awarded contracts. It's a common practice, and everybody does it. The truth of the matter is companies that quote realistic bid prices are not awarded contracts." Let us assume that…
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