One Cost-Of-Living Indicator Available on the Internet Shows That a Salary

question 102

Multiple Choice

One cost-of-living indicator available on the Internet shows that a salary of $40,000 in Santa Barbara,California,is equivalent to $14,000 in Wichita,Kansas.This is primarily because of housing,which is much less expensive in Wichita.What does this difference say about how the federal government calculates poverty?

• A) It highlights something the poverty line shows us: that poverty is connected to the local cost of living, reflected in the differences in rates of poverty in different parts of the country.
• B) It shows that the poverty line is more or less accurate, because it has been recalibrated to take into account housing costs.
• C) It points to a flaw in the way the government calculates the poverty line, as the standard is uniformly applied without regard to regional differences.
• D) It points to a flaw in the way the government calculates the poverty line, as it proves there are far more poor people in the Midwest.

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Definitions:

License Fees

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Limited And Bundled Choice Problem

A situation in which consumers' options are restricted or pre-selected in packages, potentially influencing their preferences or decisions.

Principal-Agent Problem

A dilemma in economics that occurs when one person or entity (the agent) is able to make decisions on behalf of, or that impact, another person or entity (the principal), leading to potential conflicts of interest.

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