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A worker incurs an 'effort cost' of $2 for each unit of a good they produce. A firm currently pays the worker $10 to produce
A worker incurs an 'effort cost' of $2 for each unit of a good they produce. A firm currently pays the worker $10 to produce 5 units of a good (which the firm values at $25 each). The firm is considering a commission pay scheme where they would pay the worker $5/unit. Under this scheme, the worker would produce 8 units. Given this information... Question 5 options: the worker would be better off under the fixed wage scheme (of $10). it is more profitable for the firm to move to the commission pay scheme. it is less profitable for the firm to move to the commission pay scheme. None of the above
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