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1. The Lumber Company hires two different types of workers, lumberjacks and lumber camp supervisors. The sole task of a lumberjack is to chop down trees. The purpose of a lumber camp supervisor is to oversee the work of lumberjacks in order to ensure that they are working efficiently.
a) Explain the advantages and disadvantages of paying lumberjacks per tree that they chop down. Does it make sense for The Lumber Company to pay their lumberjacks in this way?
b) Explain the advantages and disadvantages of paying lumber camp supervisors per tree that is chopped down by lumberjacks under their supervision. Does it make sense for The Lumber Company to pay lumber camp supervisors in this way?
c) Imagine that lumber camp supervisors are paid more per year than lumberjacks. A lumber camp supervisor vacancy arises, and The Lumber Company must promote one of the lumberjacks to the lumber camp supervisor position. Do you believe that it makes more sense to promote the best lumberjack? Or does it make more sense to promote that lumberjack whom the Lumber Company believes will be the best lumber camp supervisor? In either case, explain the rationale.
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