A good salesperson can sell $100,000 worth of goods, while a poor one can sell only $10,000 worth of goods. Job applicants know if they are good or bad, but the firm does not
A firm will offer job applicants a choice between a fixed salary of $2,000 or a commission on the sale. Assume risk-neutral salespersons and no opportunistic behavior. Given that the firm wants to distinguish a prospective good salesperson from a poor one, what should be the commission on sales? A) Commission should be larger than 50%.
B) Commission should be larger than 40%.
C) Commission should be between 2% and 20%.
D) Commission should be smaller than 2%.
C
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Peg's Kegs sells kegs in a perfectly competitive market. Because low demand forced price below average variable cost, Peg has made the short-run decision to shut down. Her current loss is
a. zero b. greater than if she had kept operating c. the same as the losses she was incurring while operating d. equal to fixed cost e. less than her total revenue
The dominant factor affecting medical care delivery and finance in the 1980s was:
a. creation of Medicare and Medicaid. b. prospective payment for hospitals. c. the explosive growth of managed care. d. the Hill-Burton Act. e. ERISA.