If a worker's output depends on external factors other than just the level of effort of the worker, then:
A) fixed salaries will always be preferred by the workers to any piece rate pay
B) fixed salaries will always be preferred by the employers.
C) workers will demand higher wages if pay is piece rate.
D) workers will demand higher wages if pay is fixed.

Question

Quizplus · Accepted Answer

If the worker's output depends on external factors other than just their own effort, then paying them based on a piece rate may result in lower pay due to factors outside of their control. Therefore, workers may demand higher wages if pay is piece rate to account for this risk. Option A is incorrect because workers may prefer fixed salaries if they value the security and predictability of a stable income. Option B is incorrect because the choice of pay structure is based on considerations of both the employer and the worker. Option D is incorrect because if the worker's output is influenced by external factors, then paying them a fixed wage may result in lower pay since they are not being compensated for any above-average performance.

If a Worker's Output Depends on External Factors Other Than