You Are the Sales Manager of a Company That Manufactures

question 107

Essay

You are the sales manager of a company that manufactures and markets server computers. The company's products require high-involvement from the sellers and require salespeople to provide complex and technical information. What kind of a compensation structure do you select for your sales representatives?

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Definitions:

External Costs

Costs incurred by third parties who are not directly involved in a transaction or economic activity, such as environmental pollution affecting the community.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as production volume increases.

Marginal Social Cost

The total cost to society of producing one additional unit of a good or service, including both direct costs and any adverse impacts on third parties.

External Costs

Costs that affect parties who do not directly participate in an economic transaction, often not reflected in market prices (e.g., pollution).