A Group of Assembly Line Workers at an Automobile Manufacturing

question 33

Multiple Choice

A group of assembly line workers at an automobile manufacturing plant felt that they were being severely underpaid. Their bosses wouldn't give them a chance to explain their problem. So, the group approached a labor union to help them with their problem. In terms of equity theory, this group is trying to restore equity by:

• A)rationalizing inputs.
• B)changing the referent.
• C)changing instrumentality.
• D)employee turnover.
• E)increasing outcomes.

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

MC = MR

This abbreviation stands for the equality of marginal cost (MC) and marginal revenue (MR), a condition for profit maximization in perfectly competitive markets.

Profit

The profit achieved when the income from business operations surpasses all associated expenses, costs, and taxes.

MC < MR

A condition in which the marginal cost of producing an additional item is less than the marginal revenue earned from selling it, suggesting that increasing production is profitable.