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Total compensation for the seller

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Reference no: EM133081894

Consider a firm selling their product at price p=100.2

They face production costs C given by C=80X, where X is the number of units produced.

They have to hire a seller, whose effort disutility EC is given by EC=10+2X

Suppose that the firm design the seller's pay as the sum of a fixed salary component "a" and a bonus "b" for each unit sold. What is the fixed salary?

  • Consider a firm selling their product at price p=100.
  • They face production costs C given by C=80X, where X is the number of units produced.
  • They have to hire a seller, whose effort disutility EC is given by EC=10+2X2
  • Suppose that the firm design the seller's pay as the sum of a fixed salary component "a" and a bonus "b" for each unit sold. What is the total compensation for the seller?

Reference no: EM133081894

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