146k views
3 votes
A commission-paid shoe salesman must decide whether to work hard or shirk. Working hard would increase the probability of a sale from 20% to 40% but would cost him $20. If the salesman is paid a $40 commission per sale and a $20 fixed salary and is under monitoring where he would get fired if he doesn’t work hard, what would he choose to do?

a. ​Work hard
b. ​Shirk
c. ​Walk away from the job
d. ​None of the above

User Xeaza
by
7.7k points

1 Answer

1 vote

Final answer:

The shoe salesman would choose to work hard in this scenario because it increases the probability of a sale and therefore his earnings.

Step-by-step explanation:

The shoe salesman would choose to work hard in this scenario. Working hard increases the probability of a sale from 20% to 40%, which means he has a higher chance of earning a commission. Although working hard would cost him $20, the $40 commission per sale and $20 fixed salary would offset the cost and provide a higher overall earnings. Additionally, being under monitoring where he may get fired if he shirks reinforces the incentive to work hard.

User Mike Strong
by
7.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories