Fred's Hourly Wage Increases from $8 to $10

question 294

Multiple Choice

Fred's hourly wage increases from $8 to $10.Which of the following describes a consequence of the increase in Fred's wage?

• A) The opportunity cost of Fred's leisure time has decreased.
• B) Fred may choose to work fewer hours due to the increase in his wage.
• C) If Fred's labor supply curve is upward sloping,Fred will choose to work fewer hours.
• D) Both a and b are correct.

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Definitions:

Activity-Based System

A method in accounting that allocates costs to specific activities based on their use of resources, aimed at providing more accurate cost information.

Non-Volume-Based Costs

Costs that do not vary directly with the volume of production or sales, often encompassing fixed costs like rent or salaries.

Volume-Based Costs

Costs that vary directly with the level of production or sales volume, such as direct materials and direct labor, contrasting with fixed costs that remain constant regardless of volume.

Qualitative Characteristics

The attributes that make financial information useful to users, including relevance and faithful representation.