A good salesperson can sell $500,000 worth of goods, while a poor one can sell only $100,000 worth of goods. Job applicants know if they are good or bad, but the firm does not

A firm will offer job applicants a choice between a fixed salary of $10,000 or a 10% commission. Assuming risk-neutral salespersons and no opportunistic behavior, can the firm determine a prospective good salesperson from a poor one? A) Yes, because a poor salesperson will always choose the fixed salary.
B) Yes, because a good salesperson will always choose the fixed salary.
C) No, because a poor salesperson is indifferent between the two contracts.
D) No, because a good salesperson is indifferent between the two contracts.


C

Economics

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