If TruLite's Basic Production Employee Receives an Hourly Wage of Comp

question 33

Multiple Choice

If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:

• A) the employee can remain completely risk-averse.
• B) the employee must accept risk of production variability.
• C) output becomes a subjective measure of performance.
• D) there are no compensating differentials.

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Definitions:

Consumer Surplus

The difference in the amount consumers are prepared to pay versus what they actually pay for goods or services.

Trucks

Large motor vehicles designed for transporting goods by road.

Government Revenue

Income received by the government from taxes and other sources used to fund public services and projects.

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade and protect domestic industries.