A So-Called Welfare Cliff Occurs When

question 241

Multiple Choice

A so-called welfare cliff occurs when

• A) the number of welfare-payment recipients steeply declines.
• B) a welfare-payment recipient's overall income falls if they earn more from work.
• C) the government runs out of funds and begins cutting social programs, including welfare payments.
• D) a low-income household's application for welfare payments gets bogged down in the bureaucracy.

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Definitions:

Utility Function

A mathematical representation in economics that captures the level of satisfaction or utility that consumers derive from consuming goods and services.

Desert Island

A secluded and uninhabited island, often used in scenarios and thought experiments in economics and ethics to explore human behavior in isolation.

Competitive Equilibrium

A market situation where supply equates demand, leaving no incentive for price changes, assuming all agents are price-takers.

Perfect Substitutes

Items that can replace each other without affecting the consumer's satisfaction negatively.