The Percentage of Workers Whose Wages Are Set by Explicit

question 207

Multiple Choice

The percentage of workers whose wages are set by explicit contracts increases. This should

• A) make it more difficult for the labor market to reach an equilibrium after a change in the demand for labor.
• B) make it easier for the labor market to reach an equilibrium after a change in the demand for labor.
• C) have no impact on the movement of the labor market toward equilibrium after a change in the demand for labor.
• D) cause the labor market to always be at an equilibrium, even if there is a change in the demand for labor.

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Definitions:

Standard Price

The predetermined cost of a single unit of product or service, used in budgeting and to measure efficiency.

Direct Labor Rate Variance

The difference between the expected cost of direct labor and the actual cost incurred, based on the rate paid per hour.

Direct Labor Time Variance

The difference between the actual time spent on production and the estimated standard time, multiplied by the standard labor rate.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or budgeted) cost, based on standard rates and actual hours worked.