If TruLite's factory workers receive an hourly wage,described by the equation; Compensation = $5.00 + .10Q,where Q is the number of light switches installed per hour,then:
A)the employee can remain completely risk-averse.
B)the employee must accept risk of production variability.
C)output becomes a subjective measure of performance.
D)there are no compensating differentials.

Question

Quizplus · Accepted Answer

The equation indicates that the employee's compensation is directly linked to their level of productivity (number of light switches installed per hour). Therefore, if the employee wants to increase their earnings, they must accept the risk of variability in their production. This means that the more efficient and productive they are, the higher their compensation will be.

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