Which of the Following Practices Would Indicate That an Employer

question 115

Multiple Choice

Which of the following practices would indicate that an employer is trying to overcome a moral-hazard problem with his employees?

• A)The employer pays his workers wages that are unusually high for the industry and region.
• B)The employer pays his employees year-end bonuses depending to how well the business does and his observations of the employees' efforts.
• C)The employer has voluntarily removed video cameras from the factory floor.
• D)Both A and B are correct.

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Definitions:

Direct Operating Expenses

Costs that are directly associated with the operation of a business, such as wages and raw materials.

Revenues

The total income received by a company from its business activities, typically from the sale of goods and services before any expenses are deducted.

Income From Operations

The earnings generated from a company's primary business activities, excluding non-operating income and expenses.

Investment Center

A business unit within an organization that is responsible for its own revenue, expenses, and investments, and is analyzed for profitability.