Suppose a Community Has a Cash Welfare Program That Pays

question 25

Multiple Choice

Suppose a community has a cash welfare program that pays $2,000 annually to individuals earning less than $20,000 per year. Jamie's salary is $19,500. She is offered a promotion that would bring her annual salary to $21,000. Jamie declines the promotion, because she would ultimately take home $500 less after losing access to cash welfare. This is an example of a reduction in _______ caused by the design of a(n) _______ program.

• A)equity; in-kind transfer
• B)equity; means-tested
• C)efficiency; in-kind transfer
• D)efficiency; means-tested

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Definitions:

Competitive Market

A competitive market is one in which a large number of buyers and sellers interact, leading to goods and services being offered at market-determined prices with minimal barriers to entry or exit.

Market Price

The current value at which a good or service can be bought or sold in a market.

Economic Profits

The discrepancy between a corporation's total earnings and all of its costs, covering both overt and hidden expenses.

Competitive Market

A market structure characterized by a large number of sellers and buyers, where no single entity can dictate prices or market conditions.