Entrepreneurship and Small Business (ESB) Certification 2026 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 405

In what scenario can businesses compensate employees for work they produce?

Monthly salary

Piece work

In a piece work scenario, employees are compensated based on the amount of work they produce, which is directly tied to their output. This type of compensation structure incentivizes productivity since the amount earned is linked to the quantity of work completed. It is commonly used in industries such as manufacturing or agriculture, where the work can be easily quantifiable.

While monthly salary and time-based pay provide fixed compensation irrespective of output, piece work offers a more direct correlation between effort and reward, motivating employees to increase their production levels to earn more. Bonuses, on the other hand, are typically given as additional compensation based on performance or company profits but are not directly tied to the individual output of work done, which differentiates them from piece work compensation.

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Time-based pay

Bonuses

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