Suppose a Cook at a Diamond Mining Camp in Canada's

question 15

Multiple Choice

Suppose a cook at a diamond mining camp in Canada's North earns a much higher wage than a cook with similar training and experience at an office building in Halifax.Economists would likely call this

• A)a temporary factor-price differential.
• B)a compensating differential.
• C)an intrinsic difference.
• D)an acquired difference.
• E)an equilibrium differential.

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Definitions:

Accrual Basis of Accounting

A financial recording technique that logs income and costs as they are accrued, without considering the actual exchange of cash.

Revenue Recognition

The accounting principle that dictates how and when revenue is considered earned and should be recorded in the financial statements.

Expenses

The outflow of money to pay for goods or services, an essential component of a company's operations.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to the accrual basis.