b The manager institutes an incentive structure to ensure A

(b) The manager institutes an incentive structure to ensure:

(A) workers are in fact working at the expected potential.

(B) workers are in fact working at their utility-maximizing effort level.

(C) the firm produces on the production function.

(D) the firm produces above the production function.

Solution

The manager institutes an incentive structure to ensure:

(C) the firm produces on the production function.

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