Scenario 14.1 In Academia, Professors in Some Disciplines Receive Higher Salaries Than

question 77

Multiple Choice

Scenario 14.1
In academia, professors in some disciplines receive higher salaries than others. For example, professors teaching in business schools receive higher salaries than professors in the English department. Suppose at the University of Lethbridge, assistant professors in the business school earn $80,000 while assistant professors in the English department earn $50,000. Now suppose the government passes comparable worth legislation that requires academic institutions to pay all faculty the same salaries.
-Refer to Scenario 14.1.Following the passage of comparable worth legislation, the University of Lethbridge responds by placing salaries for all assistant professors at $80,000.Which of the following is the result of the legislation?

• A)The supply of English professors increases; the market for business professors is not affected.
• B)The demand for English professors decreases; the market for business professors is not affected.
• C)There will be a surplus in the market for English professors and a shortage in the market for business professors.
• D)There will be a surplus in the market for English professors and the market for business professors will not be affected.

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Definitions:

Sales

Revenue generated from goods or services exchanged by an entity during its normal business operations.

Break-even Analysis

An assessment to determine the sales volume at which total revenues equal total costs, indicating no net loss or gain.

Cost-volume-profit Analysis

An accounting technique that analyzes how changes in costs, sales volume, and price affect a company's profit.

Contribution Margin Ratio

The contribution margin ratio quantifies the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs and generate profit.