Which of the Following Is a Reason the Peter Principle's

question 1

Multiple Choice

Which of the following is a reason the Peter principle's inefficient promotion practices might occur?

• A) asymmetric ignorance about workers' true abilities
• B) incentive problems
• C) hierarchical management structures
• D) tournament schemes
• E) efficiency wages

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Definitions:

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, used to cover fixed costs and contribute to net income.

Fixed Costs

Expenses that do not change with the level of production or sales over a relevant period, such as rent, salaries, and insurance.

Break-even Sales

The amount of sales needed to cover all fixed and variable costs, resulting in zero profit.

Selling Price

The amount for which a good or service is sold to customers, determining the revenue generated from sales.