Under a piece rate pay scheme where all workers face different upward-sloped marginal cost curves for providing effort,
A) all workers will provide the same amount of effort.
B) all workers will produce the same amount of output.
C) all workers will be paid the same amount.
D) workers with higher marginal cost curves for providing effort will produce more output than workers with lower marginal cost curves.
E) workers with higher marginal cost curves for providing effort will produce less output than workers with lower marginal cost curves.

Question

Quizplus · Accepted Answer

Under a piece rate pay scheme, workers are paid based on their output. Those with higher marginal costs for providing effort will produce less output than those with lower marginal costs because it becomes more expensive for them to increase their effort compared to those with lower marginal costs.

Under a Piece Rate Pay Scheme Where All Workers Face