Pietro Is a Manager at a Carwash

question 155

Essay

Pietro is a manager at a carwash.He has hired 10 workers to wash and detail cars for him and is considering what type of payment scheme he should set up for his workers.He can pay each of his workers $9 per hour to wash and detail cars,or he can pay his workers $12 for each car a worker washes and details.(It takes 75 minutes,on average,for an employee to wash and detail a car.)If Pietro wants to maximize the number of cars his workers wash and detail in one day,which payment scheme should he use? Explain.

---

Definitions:

Preference in Pricing

A practice where certain customers are offered better prices or terms than others, often based on the volume of business, loyalty, or strategic importance.

Clayton Act

A U.S. antitrust law aimed at promoting competition among businesses by prohibiting certain practices that restrict commerce.

Tying Contracts

Agreements where the sale of one product (the tying product) is conditioned on the purchase of another (the tied product).

Supply Discrimination

Describes a situation where suppliers treat certain customers or buyer groups differently, often unfairly.