If TruLite's factory workers receive an hourly wage,described by the equation; Employee compensation = $5.00 + 0.10Q,where Q is the number of light switches installed per hour,then:
A)$5.00 is the basic incentive to produce.
B)Q is entirely dependent on random elements in the production system.
C)$0.10 is the incentive to increase effort.
D)effort is unimportant in the performance evaluation system of the firm.

Question

Quizplus · Accepted Answer

The equation shows that for every light switch installed, the employee compensation increases by $0.10. This serves as an additional incentive for increased effort since the more switches installed per hour, the higher the compensation received. Therefore, option C is correct, as $0.10 is the incentive to increase effort. Option A is not entirely correct because although $5.00 provides a basic incentive, the additional compensation based on the number of switches installed further incentivizes productivity. Option B is incorrect since Q is not entirely dependent on random elements, but rather the effort and efficiency of the workers. Option D is incorrect as the equation explicitly shows that employee compensation is dependent on the number of switches installed per hour, indicating that effort is an essential factor in the performance evaluation system.

If TruLite's Factory Workers Receive an Hourly Wage,described by the Equation;