Which of the Following Statements Is Least True Regarding the Use

question 7

Multiple Choice

Which of the following statements is least true regarding the use of incentive pay for sales employees?

• A)If a firm wants to tie pay to a performance measure that is affected by random factors, the firm need not compensate employees for the resulting increase in the variability of their pay
• B)In determining how closely to tie pay to performance, the firm must weigh the costs of imposing risk on risk-averse employees against the benefits of providing additional incentives
• C)When both risk and incentives are present, the optimal commission rate will reflect a tradeoff among these forces and will be somewhere between 0 percent and 100 percent
• D)Stronger incentives are called for if the variance of measured performance is lower
• E)When an employee captures all the value associated with extra effort, the employee chooses the effort level that equates the total marginal benefit of effort to the total marginal cost

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Definitions:

Stomata

Small openings on the surface of leaves and stems that allow for gas exchange.

Humidity

A measure of the amount of water vapor in the air, affecting weather, climate, and comfort levels.

Chemical Signals

Molecules released by organisms to communicate with each other, playing critical roles in behaviors such as mating, aggression, and territory marking.

Hormonal Messages

Signals transmitted within the body by hormones, which are chemical messengers secreted by endocrine glands to regulate physiological processes.