A Competitive Limitation to the Straight Salary Plan for Compensating

question 63

Multiple Choice

A competitive limitation to the straight salary plan for compensating a sales force is that:

• A)It offers little direct incentive for the salespeople.
• B)Management has more difficulty controlling the activities of the sales force.
• C)It is the highest cost plan of all the major types.
• D)Usually it is not simple to understand or economical to administer.
• E)It usually is not workable when the job entails only missionary activities.

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Definitions:

Invisible Hand

A metaphor introduced by Adam Smith to describe the self-regulating nature of the marketplace, where individual self-interests unintentionally benefit society as a whole.

Price Mechanism

The way in which prices rise and fall as a result of changes in demand and supply, guiding the allocation of resources in a market economy.

External Benefit

A benefit from a good or service that is received by someone not directly involved in the transaction or production of that good or service, also known as a positive externality.

Pollution

The introduction of contaminants into the natural environment that cause adverse changes and harm to the ecosystem.