A Community of 100 Persons Wants to Redistribute (Transfer)some Income

question 42

Multiple Choice

A community of 100 persons wants to redistribute (transfer) some income from themselves to members of group A.  So far, they don't seem to be able to do what they say they want to do.  This is most likely because each member of the community of 100 persons sees his contribution as __________________ relative to the total (of contributions) and therefore chooses to be a __________________.

• A)large; rent-seeker
• B)small; rent-seeker
• C)small; free rider
• D)large; free rider

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Definitions:

Direct Labour Cost

The wages paid to workers who are directly involved in the manufacturing or production process.

Direct Materials Cost

Direct materials cost refers to the expenditure on the raw materials that are directly identifiable and allocable to the production of a product.

Overapplied Overhead

This refers to a situation in which the allocated overhead cost is greater than the actual overhead cost incurred.

Predetermined Rate

A rate calculated before the fiscal period begins, used to apply costs to production or operations, often based on labor hours or machine hours.