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Theory of Individual Behavior

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An internal study at Mimeo (mfg of low end photo copiers), revealed that much of its workers assembles 3 copiers per hour and is paid $3 for each assembled. There is no supervisor, but there is a quality control rep who verifies the quality of each copier before the worker is paid. Your supervisor wants you to evaluate a plan designed to cut costs. Under the plan, the workers would be paid a fixed rate of $8/hour. Would you favor the plan? Explain.

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This solution is comprised of a detailed explanation to answer whether you would favor the plan.

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Before the plan, the workers will get their compensation for each copier they assembled. At the current operation, most of the workers can assemble 3 copiers per hour and is paid $3 for each ...

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