Suppose That a Union Successfully Negotiated a 10 Percent Wage

question 53

Multiple Choice

Suppose that a union successfully negotiated a 10 percent wage increase and the quantity of labor demanded increased by 10 percent. We can conclude that

• A)the labor demand curve must have independently shifted to the right.
• B)labor demand is highly elastic.
• C)the coefficient of labor demand elasticity is less than 1.
• D)labor demand is unit-elastic.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or jobs, computed before the costs are incurred, based on estimated rather than actual costs.

Direct Labor-Hour

Direct labor-hour is a measure of the time workers spend on specific tasks directly involved in the production of goods.

Overapplied Overhead

A situation where the allocated overhead cost is more than the actual overhead cost incurred.

Underapplied Manufacturing Overhead

A situation where the actual manufacturing overhead costs are greater than the allocated overhead costs.