A firm could persuade the sales agent to accept profit based compensation if the new commission is
a. Positive sales biased
b. Negative sales biased
c. Sales neutral
d. None of the above
c
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Explain why the marginal cost of production must increase if the marginal product of a variable resource is decreasing
What will be an ideal response?
When an economy is temporarily operating at an output that is beyond its full-employment rate,
a. excess supply in resource markets will eventually lead to lower resource prices, which will decrease costs and direct the economy toward full employment. b. excess demand in resource markets will lead to higher resource prices, which will increase costs and direct the economy toward full employment. c. lower wages and prices will quickly restore full employment. d. only restrictive fiscal policy will direct the economy back to full employment.
The assumptions needed for the Coase theorem to work:
A. are often observed in the real world. B. always hold true in the real world. C. often do not hold true in the real world. D. never hold true in the real world.
In the presence of asymmetric information, the only contract that results in production efficiency and no moral hazard is the one in which
A) the agent receives a fixed fee. B) the principal receives a fixed rent. C) profit is shared. D) revenue is shared.