Exhibit 27-5 -Refer to Exhibit 27-5. In case (1), with a rise in the wage rate from W₁ to W₂, the wage bill will fall if A)(Q₁ - Q₂) x W₁ (W₂ - W₁) x Q₂. B)(Q₃ - Q₂) x W₃ (W₂ - W₃) x Q₂. C)W₂ x Q₂ Q₃ x W₁. D)(W₁ - W₃) x Q₂ (W₂ - W₁) x Q₂.

Question

Exhibit 27-5 -Refer to Exhibit 27-5. In case (1), with a rise in the wage rate from W₁ to W₂, the wage bill will fall if A)(Q₁ - Q₂) x W₁ > (W₂ - W₁) x Q₂. B)(Q₃ - Q₂) x W₃ > (W₂ - W₃) x Q₂. C)W₂ x Q₂ > Q₃ x W₁. D)(W₁ - W₃) x Q₂ > (W₂ - W₁) x Q₂.

Quizplus · Accepted Answer

The wage bill will fall if the total payment to labor (wage rate times quantity of labor) decreases with the increase in wage rate. Choice A correctly represents a scenario where the decrease in labor quantity (due to the wage increase) multiplied by the initial wage is greater than the increase in wage multiplied by the new quantity of labor, indicating a fall in the total wage bill.

Exhibit 27-5 ​

Exhibit 27-5