After Browsing the Shoe Store for a While, Bob Buys

question 126

Multiple Choice

After browsing the shoe store for a while, Bob buys a pair of Nike running shoes. Economists would say that Bob:

• A)is revealing a strong distaste for New Balance running shoes.
• B)will always choose Nike over any other shoe brand.
• C)receives more utility per dollar from Nike running shoes than any other pair in the store.
• D)would receive disutility from other pairs of running shoes.

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Definitions:

Direct Labour

The wages and other compensation paid to employees who are directly involved in producing goods or providing services.

Labour Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost of labor for the actual production level.

Labour Efficiency Variance

A measure used in accounting to indicate the difference between the actual number of labor hours used and the standard number of hours that should have been used, multiplied by the standard labor rate.

Variable Overhead

Costs that vary with the level of production or business activity, such as utilities and indirect materials, but do not directly correlate to direct labor or materials.