Which of the Following Is NOT a Valid Criticism of the Commission

question 80

Multiple Choice

Which of the following is NOT a valid criticism of the commission compensation system as it is currently used to compensate ad agencies?

• A)It is difficult to administer.
• B)Media costs have risen more rapidly than inflation.
• C)There is an incentive to avoid noncommissionable media.
• D)Media costs do not relate directly to effort or expertise expended by agencies.
• E)It keeps the emphasis in agency competition on nonprice factors.

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Definitions:

Short Run

A period in economics where at least one factor of production is fixed and cannot be altered.

Inputs

Resources such as labor, materials, and capital used in the production process to create goods or services.

Existing Firms

Companies or businesses that are currently in operation within a particular market or industry.

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.