The Difference Between the Salaries Paid to Movie Stars and to Actors

question 211

Multiple Choice

The difference between the salaries paid to movie stars and to actors who play supporting roles is much greater today than it was in the 1930s and 1940s.What factor explains this increase in relative salaries over time?

• A)Technological advances in the entertainment industry increase the revenue that successful movies can earn. This has increased the movie studios' willingness to pay high salaries to movie stars.
• B)Agents of movies stars are effective in obtaining large salaries for their clients today. Few movie stars had agents to negotiate for them in the 1930s and 1940s.
• C)The studio system that dominated the industry in the 1930s and 1940s no longer exists. The studio system allowed movie studios to sign actors to long-term contracts that kept salaries down.
• D)There was no actors' union in the 1930s and 1940s. The rise of strong actors' unions has caused salaries of movies stars to be greater today than in previous years.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (or financial statements) is represented as a proportion of the total account.

Sales Returns

Goods returned by the customer to the seller for a refund or credit, reducing the total sales revenue.

Net Sales

Net sales refer to the amount of revenue generated from product sales after deducting returns, allowances for damaged goods, and discounts.

Vertical Analysis

A financial statement analysis method that lists each line item as a percentage of a base figure within the same statement.