A property in Arizona sells for $400,000. If the agent earns 3% on the first $100,000 and 2.5% on the remainder, what is the total commission?
Question & Answer
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$10,500
$10,000
This answer incorrectly applies a flat 2.5% rate to the entire $400,000, ignoring the higher 3% rate on the first $100,000. This mistake fails to account for the tiered commission structure specified in the question.
$11,500
This answer likely results from adding the two commission percentages (3% + 2.5% = 5.5%) and applying that to the full amount, or incorrectly calculating the remaining amount after the first $100,000.
$12,000
This answer might come from applying 3% to the full $400,000 or adding the percentages incorrectly. It demonstrates a failure to recognize the tiered nature of the commission structure.
Why is this correct?
First $100,000 × 3% = $3,000. Remaining $300,000 × 2.5% = $7,500. Total = $10,500.
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