Consider an apple orchard owner deciding how to incentivize his fruit pickers. He pays per pound harvested but adjusts the compensation rate higher during poor harvest seasons. As a consequence
a. The compensation rate should be fixed at all times
b. The pickers might try to game the system by discouraging others from harvesting too much
c. The pickers would claim good harvests in order to be paid higher piece rates even during poor harvest seasons
d. None of the above
Question 2
Break-even quantity is a point where
a. Level of profit is maximized
b. Level of cost is minimized
c. Only variable costs are covered
d. There is neither a profit nor a loss
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