Final answer:
The correct answer is cost-plus, which is a compensation system where a client pays a fee based on the agency's work cost plus a profit margin.
Step-by-step explanation:
Under the cost-plus system of compensation, the client agrees to pay the agency a fee based on the price of its work along with some agreed-on profit margin. This compensation model is often used in various service industries, including advertising, consultancy, and contracting, where the agency or firm calculates the total costs of the project and then adds a percentage or fixed fee on top as profit.
This allows for a transparent billing process where the client knows that they are paying the actual costs plus an additional fee for the service provider's profit.
The correct answer is E. cost-plus. Under the cost-plus system of compensation, the client agrees to pay the agency a fee based on the price of its work along with some agreed-on profit margin. This system is commonly used in the business world, especially in construction or manufacturing industries.