In discussing"output-based compensationschemes," such aspiece-rate systems, Stanford economist Edward Lazearobserved, "One major advantage of this approach is that it accommodates a variety of workerpreferences." But he alsonoted, "A disadvantage is that a purepiece-rate scheme makes the worker bear risk associated with variations in . . . businessconditions."

Source: Edward P.Lazear, "Compensation and Incentives in theWorkplace," Journal of Economic Perspectives, Vol.32, No.3, Summer2018, pp. 195-214.

1.) What does Lazear mean by the first quoteabove? How do these compensation schemes accommodate different workerpreferences? Preferences forwhat?

A.

Piece-rate pay can benefit workers who prefer to earn more income as well as those who prefer more leisure time.

B.

Piece-rate compensation can benefit both workers who have less ability as well as those who have greater ability.

C.

Apiece-rate system can benefit workers who prefer a slower work pace and those who prefer a faster work pace.

D.

All of the above explain howpiece-rate systems can accommodate a variety of worker preferences.

2.) What does Lazear mean by the second quoteabove? What are"business conditions"? How do they affect worker compensation when a firm is using apiece-rate scheme?

When business conditions arepoor, workers will produce (more OR less) (Choose one in bold) output. If they are paid a straightsalary, their income will (increase, not change OR decrease) (choose one in bold), but if they are on apiece-rate system, their incomes will likely (not change, decrease OR increase) (choose one in bold). As aresult, piece-rate workers often bear (less OR more) (choose one in bold) risk and their incomes are (less OR more) (choose one in bold) stable than workers who are paid a straight salary.

In discussing "output-based compensation schemes," such as piece-rate systems, Stanford economist Edward Lazear observed, "One major advantage of this approach is that it accommodates a variety of worker preferences." But he also noted, "A disadvantage is that a pure piece-rate scheme makes the worker bear risk associated with variations in . . . business conditions. Source: Edward P. Lazear, "Compensation and Incentives in the Workplace," Journal of Economic Perspectives, Vol. 32, No. 3, Summer 2018, pp. 195-214. a. What does Lazear mean by the first quote above? How do these compensation schemes accommodate different worker preferences? Preferences for what? O A. Piece-rate pay can benefit workers who prefer to earn more income as well as those who prefer more leisure time. O B. Piece-rate compensation can benefit both workers who have less ability as well as those who have greater ability. O C. A piece-rate system can benefit workers who prefer a slower work pace and those who prefer a faster work pace. O D. All of the above explain how piece-rate systems can accommodate a variety of worker preferences. b. What does Lazear mean by the second quote above? What are "business conditions"? How do they affect worker compensation when a firm is using a piece-rate scheme? When business conditions are poor, workers will produce output. If they are paid a straight salary, their income will , but if they are on a piece-rate system, their incomes will likely As a result, piece-rate workers often bear risk and their incomes are stable than workers who are paid a straight salary