As the Owner of a Business That Sells Alarm Clocks,Jaslene

question 161

Multiple Choice

As the owner of a business that sells alarm clocks,Jaslene wants to hire workers who will sell as many of these clocks as possible.If Jaslene perceives the moral hazard to be strong among her sales employees,what could she do to minimize it?

• A) offer a significant signing bonus
• B) offer a constant hourly wage
• C) offer a constant yearly salary
• D) pay employees a percentage of their sales
• E) conduct a lengthy interview process

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Definitions:

Opportunity Costs

The cost of foregoing the next best alternative when making a decision.

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, the terms of credit to extend, and how to collect payments.

Economic Order Quantity

A calculation used to determine the most cost-effective quantity of inventory to order, minimizing both ordering and holding costs.

Safety Stock

Additional inventory beyond expected demand, kept on hand to prevent stockouts typically caused by uncertainties in supply or demand.