The Size of the Reduction in Quantity of Labor Hired

question 32

Multiple Choice

The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate depends upon all of the following except

• A)what percentage of total costs are made up of labor costs.
• B)how much quantity demanded in the output market will be reduced by a higher price.
• C)the capital to labor ratio before the wage increase.
• D)how easily other inputs can be substituted for labor.

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Definitions:

Activity Variance

Activity variance is the difference between the expected level of activity used to estimate fixed costs and the actual level of activity experienced.

Administrative Expenses

Overhead or general expenses related to the administration of a business, including office salaries, utilities, and legal costs.

Planning Budget

A budget prepared for a planned level of activity; it is used for planning and control purposes within an organization.

Administrative Expenses

Expenses that are not directly related to the production of goods or services, including salaries of administrative staff, rent, and utilities.