How Does the Government Determine the Poverty Line

question 8

Multiple Choice

How does the government determine the poverty line?

• A) It calculates a strict,no-frills budget based on cost estimates for different family sizes.
• B) It multiplies the cost of an average household's rent by three.
• C) It calculates the average cost of living in each of four regions of the United States and divides that number by the average cost of rent in those places.
• D) Because the cost of living varies across the country,it calculates the cost of living in each region and determines a poverty line for each U.S.region.

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Definitions:

Fixed Cost

Expenses that do not change with the level of output produced, such as rent or salaries.

Demand Curve

A graph displaying the relationship between the price of a good and the quantity demanded, typically showing that as the price decreases, the quantity demanded increases.

Cost Functions

Mathematical representations that describe how production costs change with changes in the level of output.

Monopolistic Competitors

Firms operating in a monopolistic competition market structure, offering products that are differentiated from those of rivals but not completely unique.