Consider the problem of insuring an asset against theft. The value of the asset is $D, the insurance cost is $I per year, and the probability of theft is p. List the four outcomes in the set A associated with this risky situation. Characterise the choice between insurance and no insurance as a choice between two gambles, each involving all four outcomes in A, where the gambles differ only in the probabilities assigned to each outcome.

Amanufacturing firm is considering overhauling the existing compensation strategy. currently every front line employee who works on the assembly line earns the same hourly wage. ideally, management would like to institute a new pay system that involves pay-for-performance. which of the following recommendations is both consistent with scientific management's general emphases and generally good advice for management of this firma. the firm should adopt a differential pay system with one pay level for average performance, and a higher level for good performance. b. the firm should adopt a differential pay system, but the firm should modify it from its original design and provide many different levels of pay associated with different performance levels. c. the firm should understand worker psychology and to focus on pay as the key motivator. d. all of the abovee. none of the above