Higher Wages Generally

question 17

Multiple Choice

Higher wages generally

• A) decrease worker productivity due to the fact that workers have backward-bending labor supply curves.
• B) decrease worker productivity due to shirking.
• C) increase worker productivity due to moral hazard.
• D) increase worker productivity by increasing the quality of the applicant pool.

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Definitions:

Activity Variance

A disparity that arises when the actual level of business activity differs from what was planned or expected.

Personnel Expenses

The costs associated with employing staff, including wages, salaries, benefits, and taxes.

Direct Labor

The wages of employees directly involved in the production of goods or services, considered a variable cost.

Activity Level

Activity level refers to the volume of production or operations in a business. It is a determinant in both variable costing and activity-based costing, impacting how costs are allocated and managed.