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In 1992, the state of California charged Sears Auto Centers with overcharging customers for unneeded or unperformed repairs. Sears agreed to a settlement that could cost as much as $20 million. Sears had compensated its salespeople with commissions based on total sales. Following the settlement, Sears dropped the commissions and went to a straight salary. Sears recently indicated that it is planning to reinstate commissions for salespeople in their Auto Centers. It even plans on paying commissions for selling customers brake jobs and wheel alignments. These two products were the core of the 1992 scandal. Sears says that it has taken steps to prevent a recurrence of past problems. In particular, the deci- sion right to recommend repairs is granted to mechanics who are paid a straight salary.
Sales consultants are paid commissions for selling repair services but are not authorized to recommend repairs. Under the old system that caused problems, these individuals diag- nosed repair problems and sold the corresponding service to customers. Why do you think Sears wants to reinstall commissions for its salespeople? Do you think that the new safeguard that separates diagnosing problems from selling services will prevent a recurrence of past problems? Explain.
What factors determine the effectiveness of discretionary fiscal policy?
The question requires complete understanding of interactions between production and profit maximization.
The following questions refer to a company, whose manager recently estimated its average variable cost function to be;
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For each of the determinants of demand in Equation 2.1, identify an example illustrating the effect on the demand for hybrid gasoline-electric vehicles such as the Toyota Prius. Then do the same for each of the determinants of supply in Equation 2.2...
General Cereals, (GCI) produces and markets Sweeties!, a popular ready to eat breakfast cereal. In an effort to expand sales in the Secaucus,
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Some large firms are highly diversified and others are more focused. Holding firm size and the number of product divisions constant, which type of firm (diversified or focused) is more likely to have decentralized IT units? Explain.
Which of the following will have positive signs and which will have negative ones:
American Linen is a company that has multiple salespersons. In 2008, it changed the compensation method for its sales force, moving from a system of fixed wages to one of base wage plus charge.
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