Despite evidence that companies will find it more profitable to use a commission system of compensation rather than a salary system, many companies continue to pay their workers salaries
Which of the following is one reason why firms choose a salary system?
A) Firms that have salary systems do not have to use compensating differentials to attract employees to do hazardous jobs.
B) Many workers dislike risk and prefer to be paid a salary rather than to be paid by commission.
C) Firms often use salary systems to overcome their principal-agent problems.
D) Most business owners and managers are not trained economists; therefore, they are unaware of the research that shows a commission system is more profitable than a salary system.
B
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Which of the following statements is true?
A) Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off. B) Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. C) Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. D) All individuals in both countries are made better off as a result of international trade.
Firms should lower the prices on their goods
a. If the demand for the product is elastic b. If it acquires a firm selling a complement good c. If it acquires a firm selling a substitute good d. Both a and b