Recent Data Has Shown That Income and Volunteer Time Are

question 117

Multiple Choice

Recent data has shown that income and volunteer time are positively related.Assuming that volunteer time is included in leisure time,what could explain this observation?

• A) Higher income individuals view leisure as a normal good such that the income effect dominates the substitution effect.
• B) Higher income individuals view leisure as a normal good such that the substitution effect dominates the income effect.
• C) Higher income individuals view leisure as an inferior good such that the income and substitution effects both increase leisure time.
• D) Both A and C.

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Definitions:

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed overhead as a period expense.

Activity Base

A measure used to assign costs in activity-based costing, reflecting the volume of activity that drives costs.

Service Firm

A business that provides intangible products or services to consumers or other businesses.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, contributing to covering fixed costs and generating profit.