Economists Caution That Conventional Statistics Used to Estimate the Extent

question 132

Multiple Choice

Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty.Which of the following is an example of these benefits?

• A)State and local sales taxes are regressive. As a result, the poor have lower after-tax incomes than they would have if these taxes were proportional or progressive.
• B)The federal income tax system is progressive. As a result, the poor have higher after-tax incomes than they would have if the income tax system was proportional or regressive.
• C)Individuals with low incomes receive non-cash benefits such as free school lunches and food stamps.
• D)The federal minimum wage forces employers to pay workers with low skills an efficiency wage.

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Definitions:

Product Costs

Costs directly associated with the production of goods, including direct labor, materials, and manufacturing overhead.

Period Costs

Costs that are expensed in the period in which they are incurred, not directly tied to the production process.

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes towards covering fixed costs and profit.

Direct Manufacturing Cost

Expenses directly tied to the production of goods, including labor and materials.