Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 24

Toledo Chicken is a large chicken processor that raises, processes, and packs both fresh and frozen chicken parts. The firm has five plants located around the United States. Factory employees have been paid a fixed salary, but recently Toledo switched to a piece-rate pay system. What affect, if any, might you expect this change in compensation system to have on Toledo's productivity and total wages paid to factory employees And discuss what might be contributing to the change in productivity. In other words, what are the sources of the productivity change