In Setting Up a Combined Payment Plan for Salespeople, the Most

question 68

Multiple Choice

In setting up a combined payment plan for salespeople, the most critical question for an organization to answer is,"

• A) "What percentage of total compensation should be salary and what percentage should be commission?"
• B) "How much of the salesperson's time should be spent selling and how much in nonselling activities?"
• C) "How can the sales program compensation plan be devised so as not to cause other employees to become unmotivated?"
• D) "How long will the plan be operational before it needs to be evaluated?"
• E) "What is the strategic basis for the plan and how will its implementation be monitored?"

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Definitions:

Negative Externality

A cost experienced by a third party not involved in the economic transaction, such as pollution affecting residents near a factory.

Spillover Cost

A cost incurred by someone who did not choose to incur that cost.

Allocative Efficiency

A state of the market where resources are allocated in a way that maximizes the net benefit to society.

Productive Efficiency

Productive efficiency occurs when an economy is operating at its maximum capacity, producing goods and services at the lowest possible cost per unit.