Economics Professors Are Well Aware of the Importance of Incentives

question 69

Multiple Choice

Economics professors are well aware of the importance of incentives.Which of the following situations shows the use of a positive incentive?

• A) Students who show up late to class will not be allowed in the classroom.
• B) Students who do not have a doctor's note will not be allowed to take an exam at a different time.
• C) Students can choose whether or not they want to attend class-there is no attendance policy.
• D) Students can choose to do extra credit at the end of the semester.
• E) The professor decides to teach the class by reading out of the textbook to the entire class.

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Definitions:

Underapplied Manufacturing Overhead

The situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products.

Cost of Goods Sold

An accounting term representing the direct costs linked to the production of goods sold by a company, including both materials and labor.

Overapplied Manufacturing Overhead

A case where the estimated costs for manufacturing overhead outstrip the actual overhead expenditures.

Underapplied Manufacturing Overhead

Occurs when the actual manufacturing overhead costs are higher than the manufacturing overhead assigned to goods produced.