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Jazz Jams is an independent record label that specializes in jazz music. Jazz Jams can pay artists signed to the label according to one of two payment schemes. They could pay artists a fixed salary. They could instead pay artists per album that is sold. The number of albums that are sold is dependent upon two factors. The first factor is the quality of the music, which in turn depends upon the amount of effort that the artist puts into the album. The second factor is the amount of airplay that the album's songs receive on the radio, which is assumed to be purely based upon luck.
A) Explain the advantages to Jazz Jams when they pay artists a fixed salary.
B) Explain the advantages to Jazz Jams when they pay artists per album sold.
C) Do you believe that one method of payment is preferable over the other? Explain why or why not.
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