The Replacement Ratio Is

question 45

Multiple Choice

The replacement ratio is

• A)the reservation wage divided by the wage rate offered on a new job
• B)the reduction in real GDP caused by a 1 percent reduction in unemployment benefits
• C)after-tax income while unemployed divided by after-tax income while employed
• D)the wage rate offered on a new job divided by unemployment benefits
• E)the increase in the unemployment rate caused by a 1 percent increase in the inflation rate

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Definitions:

Fixed Overhead

The portion of overhead costs that remains constant regardless of the level of production or business activity.

Direct Labor

The labor costs directly tied to the production of goods or services, such as wages paid to employees who physically produce a product.

Raw Material

Fundamental components and elements employed at the beginning of the manufacturing or production process.

Direct Labor

The labor costs that can be directly attributed to the production of goods or services, such as wages for workers who manufacture a product.