Peter, the owner of a firm, pays his salesperson, Ann, a commission on her sales (revenue). Thus,
Question:
Peter, the owner of a firm, pays his salesperson, Ann, a commission on her sales (revenue). Thus, Ann has an incentive to maximize revenue. The graph shows how revenue and profit vary with output. Show that if she succeeds in maximizing revenue, she does not maximize the firm's profit.
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Revenue, Profit, $ per year Profit Revenue 9p q, Output per year
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