If the Value of Your Marginal Product Is 100 and You

question 44

Multiple Choice

If the value of your marginal product is 100 and you are being paid 80, which of the following is the most plausible reason that you remain with the firm?

• A)You value the high rank and leadership role as well as the salary that your position offers.
• B)You have no other options so you stay or go unemployed.
• C)You are altruistic and want to contribute to the firm's normal profit.
• D)You have no way of knowing the value of your marginal product so you feel OK about the salary of 80.

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Definitions:

Book Income Tax Expense

The accounting expense associated with income taxes payable, calculated based on the book income.

Valuation Allowance

A reserve created to account for future tax benefits which may not be realized due to insufficient future taxable income.

Subjective Assessment

An evaluation based on personal judgment rather than quantifiable evidence, often used in scenarios where objective measures are difficult to apply.

Deferred Tax Assets

Future tax benefits obtained due to temporary differences between the book value and tax basis of assets.