When Relatively Few Workers Have High Ability

question 20

Multiple Choice

When relatively few workers have high ability,

• A) they will settle for the average wage.
• B) they will want to signal their ability.
• C) the premium for high ability is less than when most workers have high ability.
• D) they do not need to signal their ability.

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Definitions:

Standard Quantity

The predetermined amount of materials or inputs that should be used in the production of goods or services under normal operating conditions.

Standard Price

A predetermined cost assigned to goods and services, used for budgeting, cost control, and performance evaluation purposes.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.

Standard Price

The anticipated or predetermined cost of a product, often used as a reference for evaluating actual costs.