Problem
1. What factors determine whether a firm offers a piece-rate or a time-rate compensation system?
2. Discuss how workers who differ in their innate abilities sort themselves across piece-rate and time-rate jobs. Also describe how the two compensation systems elicit different levels of effort from the workers.
3. If piece rates elicit more effort from workers, why do firms not use this method of compensation more often?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.