Suppose that a salesperson earns a basic monthly salary of $800 plus a commission rate is 15% and the possible bonuses are lump-sum amount of $1000 if her monthly sales exceed $10,000 and a further lump-sum of $2,500 if her monthly sales exceed $15,000. Find the function that relates sales to earnings for this salesperson and graph it. At which points is the function discontinuous? Interpret the incentives created by this pay scheme?
Suppose that a salesperson earns a basic monthly salary of $800 plus a commission rate is 15% and the possible bonuses are lump-sum amount of $1000 if her monthly sales exceed $10,000 and a further lump-sum of $2,500 if her monthly sales exceed $15,000. Find the function that relates sales to earnings for this salesperson and graph it. At which points is the function discontinuous? Interpret the incentives created by this pay scheme?
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.14P
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Suppose that a salesperson earns a basic monthly salary of $800 plus a commission rate is 15% and the possible bonuses are lump-sum amount of $1000 if her monthly sales exceed $10,000 and a further lump-sum of $2,500 if her monthly sales exceed $15,000. Find the function that relates sales to earnings for this salesperson and graph it. At which points is the function discontinuous? Interpret the incentives created by this pay scheme?
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