If a Salesperson Is Paid by the Volume of Sales

question 98

Multiple Choice

If a salesperson is paid by the volume of sales he or she makes,then the

• A) moral hazard problem is diminished.
• B) lemons problem can be screened.
• C) moral hazard problem is enhanced.
• D) adverse selection problem is enhanced.
• E) None of the above answers is correct.

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Definitions:

Feet

A unit of length in the imperial and US customary systems of measurement, equal to 12 inches or 0.3048 meters.

Costs

Expenses incurred in the process of producing or acquiring goods and services.

Latex Tubing

Flexible tubes made from latex, often used in medical, laboratory, and industrial settings.

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes associated with maintaining the business.