Which of the following is true?
a. Incentive compensation imposes no risks on the agents and thus should not affect their compensation
b. Incentive compensation imposes risk on the agent but need not be compensated for
c. Incentive compensation imposes risk on the agent for which they should be compensated
d. Incentive compensation is a bad idea
c
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The production of an industrial good in a plant emits harmful gases that cause breathing difficulty. Which of the following will happen if the government imposes a Pigouvian tax on the plant?
A) Marginal external cost will increase. B) Marginal private cost will fall. C) The quantity supplied of the good will decrease. D) The demand for the good will increase.
"The marginal social cost of burning garbage in Houston is the sum of the marginal private cost and the marginal external cost." Is this assertion correct or incorrect?
What will be an ideal response?