Which of the Following Statements Is True About Agency Commissions

question 13

Multiple Choice

Which of the following statements is true about agency commissions?

• A)The negotiated commission system is increasingly replacing the traditional commission system.
• B)Agencies are increasingly relying on mass media for their income.
• C)Agencies rely on incentive-based commission as companies are expanding their IMC programs.
• D)Typically, agencies are unwilling to negotiate their commission rates.
• E)Generally, agencies receive their highest commissions from direct mail and sales promotions.

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Definitions:

Insurer

A company or entity that provides coverage, typically in the form of compensation resulting from loss, damage, illness, or death, in exchange for premium payments.

Principal-Agent Problem

A situation in which there is a conflict of interest between a principal (such as an owner or shareholder) and an agent (such as a manager or employee) because the agent is motivated to act in their own best interests rather than those of the principal.

Effort and Output

The relationship between the level of effort applied by workers and the quantity of output produced as a result.

Low Effort

Low effort refers to minimal or inadequate application of energies or resources towards achieving a task or goal, often resulting in suboptimal performance.