- The Following Graph Shows The Relationship Between Utility And Ability Of Worker A And B X Is The Optimum Ability For 1 (113.89 KiB) Viewed 55 times
a. Worker A has lower productivity than worker B does.
b. Any worker that has ability higher than x* (optimum ability), he
or she will choose piece-
rate since it can maximize his/her utility.
c. The piece-rate restricts the level of payment to be fixed
regardless of worker’s ability.
d. Worker A prefers piece-rate pay to maximize his/her
utility.
e. None of the statements is incorrect.
The following graph shows the relationship between utility and ability of worker A and B. x* is the optimum ability for all workers. Use the following graph to answer question 3 and 4. Utility Piece-Rate Workers rā Time-Rate Workers Ability Worker A Worker B.