DrJ Has 80 Hours Per Week to Divide Between Work

question 28

Multiple Choice

Dr.J has 80 hours per week to divide between work and leisure.His wage rate if $5 per hour.Dr.J receives a lump sum payment of $100 per week.Suppose that the first $50 per week of his labor income is untaxed, but all labor income above $50 is taxed at a rate of 70%.

• A)Dr.J's budget line has a kink in it at the point where he takes 80 units of leisure.
• B)Dr.J's budget line has a kink where his income is $150 and his leisure is 70 hours.
• C)The slope of Dr.J's budget line is everywhere -1.50.
• D)Dr.J's budget line has no kinks in the part of it that corresponds to a positive labor supply.
• E)Dr.J's budget line has a piece that is a horizontal straight line.

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Definitions:

Job-Order Costing System

An accounting method used to accumulate and assign costs to custom or unique products or jobs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products or job orders, based on estimated costs and activity levels.

Manufacturing Departments

Specialized functional areas within a manufacturing facility where specific stages of production are carried out.

Machine-Hours

A measurement of production time using the number of hours machines are operated.