Scenario: Edward has inherited a house. As the house is far away from where he lives currently, it has been vacant for the past few years. A housekeeper is paid regularly to look after the house and keep it clean. However, because Edward seldom visits the house, the housekeeper does not clean the house regularly.
-Refer to the scenario above.What can Edward do to induce the housekeeper to work regularly?
A) Pay an efficient wage
B) Pay a low wage
C) Pay the wage that equals the marginal revenue product of the housekeeper
D) Pay the minimum wage that the housekeeper would accept

Question

Quizplus · Accepted Answer

The best choice would be to pay an efficient wage to the housekeeper. This will motivate the housekeeper to take the job seriously and perform their duties regularly, even when Edward is not around. Paying a low wage would not induce the housekeeper to work regularly, and paying the wage that equals the marginal revenue product of the housekeeper may not be feasible or practical. Paying the minimum wage that the housekeeper would accept may not be a fair compensation for their services.

Scenario: Edward Has Inherited a House