Which of the Following Is Not a Reason for Firms

question 249

Multiple Choice

Which of the following is not a reason for firms to choose a salary system rather than a commission system to compensate their employees?

• A)Research has shown that most companies will find that a salary system will be more profitable than a commission system.
• B)It is often difficult to attribute output to particular workers.
• C)If workers are paid on the basis of the number of units of output they produce, they may become less concerned about quality.
• D)Commission compensation systems are riskier for employees than a salary system, and many workers dislike risk.

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Definitions:

Utility Function

A representation in economics that shows the relationship between consumption bundles and the level of satisfaction or utility they provide to an individual.

Leisure

Free time when individuals are not engaged in work or essential activities, often used for relaxation, recreation, or other personal interests.

Wage Rate

The standard amount of compensation paid to an employee per unit of time (e.g., hourly, daily, or annually) for their labor.

Consumption

The process by which goods and services are utilized by consumers to satisfy their needs and desires.