In the Context of Equity Theory, Which of the Following

question 106

Multiple Choice

In the context of equity theory, which of the following is a difference between underreward and overreward?

• A) Unlike overreward, in underreward, one gets more outcomes relative to his or her inputs than the referent being considered for comparison.
• B) People experience guilt when they perceive that they have been underrewarded, whereas people experience frustration when they perceive that they have been overrewarded.
• C) People have a very high tolerance for underreward, whereas people have a very low tolerance for overreward.
• D) Unlike overreward, underreward occurs when a referent's outcome/input ratio is better than one's own outcome/input ratio.

---

Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Loss

The negative result from operations or other transactions when costs and expenses exceed revenues.

Unit Product Cost

The total cost (including materials, labor, and overhead) to produce a single unit of product.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a product.