If a Salesperson Is Paid by the Volume of Sales

question 98

Multiple Choice

If a salesperson is paid by the volume of sales he or she makes,then the

• A) moral hazard problem is diminished.
• B) lemons problem can be screened.
• C) moral hazard problem is enhanced.
• D) adverse selection problem is enhanced.
• E) None of the above answers is correct.

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Definitions:

Enforce

To compel obedience to a law, rule, or obligation through the imposition of penalties or other legal mechanisms.

Warranty Liability

Legal obligation of a seller to compensate the buyer for losses caused by defects or failures in the product warranted.

In Blank

Pertains to a document, especially a financial instrument, left partially unfilled or unsigned, allowing for details to be added later.

Transfer Warranties

Legal assurances provided during the transfer of assets, ensuring certain conditions or elements are true or will be upheld.