Some Public Transit Systems Use an "Honor System" Whereby Patrons

question 156

Multiple Choice

Some public transit systems use an "honor system" whereby patrons have to show that they have paid their fare only when asked for it by an enforcement officer.With what population would such a system be successful?

• A) a population that is willing to take risks and whose people believe that they will not be caught if they don't pay their fare
• B) a population that places a high opportunity cost on taking time to purchase a ticket
• C) a population whose people are willing to take risks,believe that they will not be caught if they don't pay their fare,and treat fines for not paying a fare as a nuisance
• D) a population that is unwilling to take risks and whose people believe there is a high chance that they will be caught if they don't pay their fare
• E) a population whose people are unwilling to take risks,believe there is a high chance that they will not be caught if they don't pay their fare,and place a low value on doing the right thing

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Definitions:

Average Price

The mean price of a good or service calculated by dividing the sum of the prices of all the items by the number of items.

Overhead Volume Variance

Overhead volume variance is the difference between the budgeted overhead at standard production volumes and the actual overhead incurred due to variance in production volume.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.