A payment system that rewards employees based on the amount that they produce or sell; pay is therefore directly linked to productivity level.

A payment system that rewards employees based on the amount that they produce or sell; pay is therefore directly linked to productivity level.

• A. Productivity
• B. Time rate
• C. Piece rate
• D. PRP

Answer: (C)

This question tests understanding of pay systems that link earnings directly to output. The system described rewards employees based on the amount they produce or sell, so pay rises as productivity increases. The term for pay that depends on the number of units produced is piece rate; earnings are literally tied to output (earnings = units produced × rate per unit), which makes it the clearest way to connect pay with productivity. Time rate pays a fixed wage per hour regardless of output, so pay isn’t directly tied to how much is produced. A performance-related pay scheme can cover a range of performance metrics beyond just quantity, such as quality or teamwork, so it isn’t restricted to output alone.

This question tests understanding of pay systems that link earnings directly to output. The system described rewards employees based on the amount they produce or sell, so pay rises as productivity increases. The term for pay that depends on the number of units produced is piece rate; earnings are literally tied to output (earnings = units produced × rate per unit), which makes it the clearest way to connect pay with productivity.

Time rate pays a fixed wage per hour regardless of output, so pay isn’t directly tied to how much is produced. A performance-related pay scheme can cover a range of performance metrics beyond just quantity, such as quality or teamwork, so it isn’t restricted to output alone.