If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:
A) $5.00 is the basic incentive to produce.
B) Q is completely dependent on random elements in the production system.
C) $0.10 is the incentive to increase effort.
D) effort is unimportant in this production system.

Question

Quizplus · Accepted Answer

The hourly wage formula shows that the additional incentive for increasing the number of light switches installed per hour (Q) is $0.10. Therefore, option C is correct. Option A is incorrect because $5.00 is simply the base wage rate and not an incentive. Option B is incorrect because Q depends on the effort made by the production employee. Option D is also incorrect because effort is crucial in this production system as it directly affects the number of light switches installed per hour (Q).

If TruLite's Basic Production Employee Receives an Hourly Wage of Comp