Which term describes wage based on number of units produced?

Which term describes wage based on number of units produced?

• A. Piece rate
• B. Time rate
• C. Wage
• D. Salary

Answer: (A)

Pay tied to the number of units produced is called piece rate. This system rewards workers directly for output—more items completed means more pay—so it strongly incentivizes producing more. It’s especially used when output can be easily counted and quality is monitored, since earnings are calculated by multiplying the number of units by a fixed rate per unit. This differs from a time rate, where pay depends on the amount of time worked rather than how much is produced; it also differs from wage in a general sense and from salary, which is usually a fixed amount regardless of how much is produced.

Pay tied to the number of units produced is called piece rate. This system rewards workers directly for output—more items completed means more pay—so it strongly incentivizes producing more. It’s especially used when output can be easily counted and quality is monitored, since earnings are calculated by multiplying the number of units by a fixed rate per unit. This differs from a time rate, where pay depends on the amount of time worked rather than how much is produced; it also differs from wage in a general sense and from salary, which is usually a fixed amount regardless of how much is produced.