When Is a Piece-Rate Contract Generally Used

question 25

Multiple Choice

When is a piece-rate contract generally used?

• A) It is used when output but not labor can be observed.
• B) It is only used to avoid adverse selection.
• C) It is used when labor but not output can be observed.
• D) It is never used in practice.

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Definitions:

Investing Activities

Transactions involving the acquisition or disposal of long-term assets and other investments not included in cash equivalents.

Machinery

Industrial or commercial equipment and devices designed for specific tasks, contributing to the production or service capabilities of a business.

Cash Flow

The total amount of money being transferred into and out of a business, measuring liquidity, financial flexibility, and overall financial health.

Operating Activities

Business activities related directly to the production, sale, and delivery of a company’s products and services, regarded as the core activities.