Question 7 (1 point) Which of the following is not true about performance-based incentives? O a) The optimal profit-maximizing commission rate for a firm is 100%. Obj The slope of the relationship between performance and pay provides incentives for effort. O c) The absolute level of pay provides incentive for effort. O d) Firms earn higher profits when they offer commission on top of salary rather than just a fixed salary. Question 8 (1 point) Which of the following is conditions would call for stronger performance-based incentives? O a) The employee is more risk averse. O b) The marginal return to effort is low. O c) The variance of measured performance is low O d) An employee's marginal cost of effort is high. Question 9 (1 point) Which of the following is not a limitation to monitoring? O a) it can invade privacy. O b) it can be costly. O c) it can be imperfect or non-comprehensive. O d) It can complicate the agency relationship by adding an extra layer Question 10 (1 point) Employees will choose to work hard if the cost of not working hard is greater than the cost of working hard. a) True (b) False