Which pay system pays employees an agreed rate for each item produced?

• A. Piece rates
• B. Time rate
• C. Salary
• D. Commission

Answer: (A)

The pay system described is piece-rate pay. Here, workers earn a fixed rate for each item they produce, so earnings rise with output. This setup is useful when output is easy to count and quality can be monitored, because it directly links pay to production. For example, if the rate is a set amount per item, total pay equals that rate times the number of items made, incentivizing higher productivity. In contrast, time rate pays by hours worked regardless of output, salary is a fixed periodic amount, and commission is based on sales rather than quantity produced.