A firm faces two kinds of employees, those able to sell 10 units/year, and those able to

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A firm faces two kinds of employees, those able to sell 10 units/year, and those able to sell 5 units/year. High-productivity employees are willing to work for $100K/year, while low-productivity employees are willing to work for only $50K/year. To screen out the low-productivity employees, the firm should

a. Offer a salary of $100K.

b. Offer a salary of $75K plus $5K/unit commission.

c. Offer a sales commission of $10K/unit.

d. Offer a sales commission of $20K/unit on sales above 5 units.

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Managerial Economics

ISBN: 9781337106665

5th Edition

Authors: Luke M. Froeb, Brian T. McCann, Michael R. Ward

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