Figure 17-6 Figure 17-6 Shows Two Different Compensation Schemes for the Vortex

Multiple Choice

Figure 17-6

Figure 17-6 shows two different compensation schemes for the Vortex Vacuum Cleaner Company.
Under Scheme I, the firm pays a consistent wage of $2,500 per month to all its salespeople for sales up to 20 vacuum cleaners. For sales of 21-30 vacuum cleaners, its salespeople earn $125 per vacuum cleaner, with wages capped at $3,750 per month for sales over 30 vacuum cleaners. If a salesperson has three consecutive months of sales below 20 vacuum cleaners, the person loses his or her job.
Scheme II represents a straight commission, with salespeople earning a commission of $125 per vacuum cleaner sold, with no wage cap.
-Refer to Figure 17-6.Under Scheme I,

A) workers compete with each other to see who can sell more than 20 vacuum cleaners in the shortest possible time.
B) workers have no incentive to sell more than 30 vacuum cleaners.
C) workers signal their productivity to the firm by consistently selling above 30 vacuum cleaners.
D) the incentive to increase productivity only occurs for sales of fewer than 20 vacuum cleaners or more than 30 vacuum cleaners.