help with econ1101 (1 Viewer)

[nufc-26]

could someone pls help me with discussion question 19 in micro,basically:
the selling agents are paid a base monthly retainer and sales commission,
the management is considering a change to salaried staff who will be paid a set monthly wage.

If agents are risk lovers rather than risk averse, how will this effect the level of set wage that they will accept to replace the current system??

 

[redslert]

this question is very simple, think about it
if you were a sales agent and you were risk adverse, that is, you are afraid that you may not sell a lot of the product, so you would rather have more set salary rather than to try and earn the same amount by selling things.

But if you were risk adverse and you are willing to take the gamble at the chance of selling more and earn the greater commission, then you are willing to accept a lower set salary

 

[RZ]

But if you were risk adverse and you are willing to take the gamble at the chance of selling more and earn the greater commission, then you are willing to accept a lower set salary

you mean risk lover

 

[nufc-26]

thanks alot guys

 

[t-i-m-m-y]

you mean risk lover

yes thats right. and its spelt averse cf. adverse i believe