My friend has challenged me with a riddle and I cant seem to figure
out what he could possibly mean!

You have a 7lb block of silver.  You have to pay your worker 1 lb of
silver each day for the next 7 days.  How can you achieve your goal by
making exactly 2 cuts of the silver block?

you cut off 1lb then you cut off another 2lb so you have a 1lb + 2lb + 4lb
first day you give them 1lb
second day you give them 2lb and they give you 1lb back
third day you give them the 1lb again
fourth day you give them the 4lb and get back the 1lb & 2lb
and so on

You get 2 cuts, so you have 3 blocks.  Since the first day requires
1lb, you know your first cut is 1/6.  This means that your next cut
will be splitting the 6 lb block.

It can be either 1/5, 2/4, 3/3.  

We can eliminate 3/3 since there would be no way to give 2 lbs.

We can eliminate 1/5 since there is no way to give 3 lbs.

Thus it has to be 2/4.
Let (G) denote giving to the worker.  Let (T) denote taking it from the worker
Day 1: 1 lb (G)
Day 2: 2 lb (G), 1 lb (T)
Day 3: 1 lb (G)
Day 4: 1 lb (T), 2 lb (T), 4 lb (G)
Day 5: 1 lb (G)
Day 6: 1 lb (T), 2 lb (G)
Day 7: 1 lb (G)

And voila