If an Employee Is Paid a Fixed Wage in a Production

question 32

Multiple Choice

If an employee is paid a fixed wage in a production environment where the wage is independent of output,then the employee has an incentive to:

• A)maximize output.
• B)shirk.
• C)innovate.
• D)search for methods to overcome random elements in production.

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Definitions:

Entire Income

The total amount of income received from all sources before any deductions, taxes or expenses are subtracted.

Units

A standard or basic quantity into which an item of supply is divided, issued, or used.

Clothing

Garments and articles worn on the body, typically made from fabric or textiles.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods and services.