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:

Span of Control

The number of subordinates or direct reports that a manager or supervisor can effectively oversee.

Subordinates

Employees or team members who are lower in rank or position and report to someone higher in the organizational hierarchy.

Direct Reporting

The process where employees report directly to their immediate supervisor without intermediaries.

Organizational Designs

The planning and structuring of an organization's roles, responsibilities, and processes to achieve its goals efficiently.