Despite evidence that companies will find it more profitable to use a commission system of compensation rather than a salary system, many companies continue to pay their workers salaries
Which of the following is one reason why firms choose a salary system?
A) Firms that have salary systems do not have to use compensating differentials to attract employees to do hazardous jobs.
B) Many workers dislike risk and prefer to be paid a salary rather than to be paid by commission.
C) Firms often use salary systems to overcome their principal-agent problems.
D) Most business owners and managers are not trained economists; therefore, they are unaware of the research that shows a commission system is more profitable than a salary system.
B
You might also like to view...
The portfolios that mutual funds offer to savers are
A) usually made up of bonds. B) usually made up of common stocks. C) tax free in most states. D) usually more liquid than the underlying assets.
What are the main differences between a monopolist and a perfectly competitive firm?
A monopolist is currently hiring 5,000 units of labor. At this level, the marginal revenue of output is $10, the (fixed) wage rate is $300, and the marginal product of labor is 50. In order to maximize profit, the firm should
A. hire more labor because the next unit of labor increases profit by $500. B. hire more labor because the next unit of labor increases profit by $200. C. hire less labor because the last unit of labor added more to total cost ($300) than to total revenue ($10). D. keep the level of employment the same because the firm is earning a profit of $100,000.
The country of Mu has continuous strong economic growth and a persistently steady price level. This situation is most likely the result of aggregate demand growing ________ aggregate supply.
What will be an ideal response?