Which of the Following Statements About Product Market Competition and Labor

question 7

Multiple Choice

Which of the following statements about product market competition and labor market competition is true?

• A)An organization that has higher labor costs than its product market competitors will have to charge lower average prices for products of similar quality.
• B)The upper bound placed by the labor market is more constrictive when labor costs are a larger share of total costs.
• C)Product market competition places an upper bound on labor cost whereas, labor market competition places a lower bound.
• D)Product market competition is the amount an organization must pay to compete against other companies that hire similar employees.
• E)Indirect payments are not considered while calculating the average cost per employee.

---

Definitions:

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products based on a predetermined activity base.

Machine-Hours

A measure of the amount of time machines are operated in the production of goods or services, used as a basis for allocating manufacturing costs.

Manufacturing Overhead

The indirect costs related to manufacturing, not including direct labor or materials, such as utility costs and maintenance expenses.