Question
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
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 $100,000/year while low-productivity employees are willing to work for only $50,000/year. The firm wants to screen out low productivity workers. Briefly explain whether each scheme below would achieve that objective. a. offer a salary of $100,000 b. offer a salary of $75,000 plus $5,000/unit commission. c. offer sales commission of $10,000/unit. d. offer a sales commission of $20,000/unit, on sales above 5 units
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