Suppose There Are Four Industries

question 375

Multiple Choice

Suppose there are four industries. Labor costs are 20 percent of total costs in A, 40 percent in B, 60 percent in C, and 80 percent in D. A ten percent increase in the price of labor will cause industry ________ to reduce quantity demanded of labor by the largest proportion.

• A) A
• B) B
• C) C
• D) D

---

Definitions:

Work In Process Inventories

Inventories that represent goods that are partially completed in a manufacturing process.

Conversion Costs

Costs related to transforming raw materials into finished goods, typically including direct labor and manufacturing overhead.

Physical Units

A measure of production output or inventory, quantified in terms of tangible goods or items.

Direct Materials

Raw materials that are directly traceable to a finished product and are necessary for its production.