Question

An internal study at Mimeo Corporation—a manufacturer of low-end photocopiers—revealed that each of its workers assembles three photocopiers per hour and is paid $6 for each assembled copier. Although the company does not have the resources needed to supervise the workers, a full-time inspector verifies the quality of each unit produced before a worker is paid for his or her output. You have been asked by your superior to evaluate a new proposal designed to cut costs. Under the plan, workers would be paid a fixed wage of $16 per hour.

Would you favor the plan? Explain.

Answer 1

3 photocopies per hour is assembled and the worker is paid $6 for each . So per hour payment = $18 .

Paying a fixed wage of $16 per hour would definitely reduce cost as it is lesser than previously paid $18 . Also workers cannot shirk and produce less or of lower quality in an hour because there is a full-time inspector verifying the quality of each unit produced . This plan becomes more favourable when the fixed wage comes with the clause of fixed units produced .