Compensating Variation Is

question 46

Multiple Choice

Compensating variation is:

• A)the change in income necessary to hold the consumer at the final level of utility as price changes.
• B)always the area under the demand curve and above the price paid.
• C)the change in income necessary to restore the consumer to the initial level of utility.
• D)the difference in the consumer's income between the purchase of the original basket and the new basket at the old prices.

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Definitions:

Political System

The system of government in a country, including the institutions, laws, activities, and principles that define how political power and authority are acquired, communicated, and exercised.

Coupon Rate

The annual interest rate paid by the issuer of a bond to the bondholder, typically expressed as a percentage of the bond's face value.

Secondary Market

A marketplace where previously issued securities and financial instruments such as stocks, bonds, options, and futures are bought and sold.