Scott is a manager at a pool cleaning business. He has hired 10 workers to clean pools for him and is considering what type of payment scheme he should set up for his workers
He can pay each of his workers $10 per hour to clean pools, or he can pay his workers $20 for each pool a worker cleans. (It takes 2 hours, on average, for an employee to clean a pool thoroughly.) If Scott wants to maximize the number of pools his workers clean in one day, which payment scheme should he use? Explain.
If Scott wants to maximize the number of pools his workers clean in one day, he should pay them $20 for each pool so that workers also will have an incentive to clean as many pools as possible. However, if the workers are rushing through cleaning pools, it is likely that the pools will not be cleaned as thoroughly.
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If the price of a firm's output rises, its
A) marginal product of labor increases. B) value of marginal product decreases. C) demand for labor increases. D) demand for labor decreases.
This market situation is much like a pure monopoly except that its member firms tend to cheat on agreed upon price and output strategies. What is it?
A) Duopoly B) Cartel C) Market sharing monopoly D) Natural monopoly