Use the Following to Answer Questions

question 273

Multiple Choice

Use the following to answer questions :
Figure: Equilibrium in the Labour Market
-At Hamill Manufacturing of Alberta,highly skilled senior machinists are paid $70 000,excluding benefits,but the average-skilled machinist generates approximately $137 000 in value added.This difference is due to the fact that the:

• A) marginal productivity theory of income distribution does not apply in this case.
• B) value of the marginal product of the last machinist hired is less than the average of all machinists employed.
• C) value of the marginal product of the last machinist hired is greater than the average of all machinists employed.
• D) value of the marginal product of the last machinist hired is equal to the average of all machinists employed.

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Definitions:

Contribution Margins

The amount remaining from sales revenue after all variable expenses have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Cost-volume-profit Chart

A cost-volume-profit chart is a visual representation that shows how changes in a company's sales volume will affect its costs and profitability, facilitating breakeven and profit-target analysis.

Total Cost Line

A graphical representation showing the total cost associated with producing various levels of output.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed costs in a company's cost structure.