Figure 9-4

question 17

Multiple Choice

Figure 9-4. The figure shows a utility function for Dexter.

-Refer to Figure 9-4. In what way(s) does the graph differ from the usual case?

• A) The utility function shown here is upward-sloping, whereas in the usual case the utility function is downward-sloping.
• B) The utility function shown here is bowed downward (convex), whereas in the usual case the utility function is bowed upward (concave).
• C) On the graph shown here, wealth is measured along the horizontal axis, whereas in the usual case saving is measured along the horizontal axis.
• D) On the graph shown here, utility is measured along the vertical axis, whereas in the usual case satisfaction is measured along the vertical axis.

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Definitions:

Variable Overhead

Overhead costs that fluctuate with changes in production level or business activity, such as utilities for machinery.

Efficiency Variance

The difference between the standard cost of labor or materials for actual production and the actual cost incurred, reflecting how efficiently resources are utilized.

Direct Labor-Hours

The total hours worked directly on the production of goods or delivery of services.

Variable Overhead

Costs that vary with production volume, such as supplies and utilities for manufacturing.