One Cost-Of-Living Indicator Shows That a Salary of $40,000 in Santa

question 9

Multiple Choice

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

• A) It shows poverty is connected to the local cost of living, which reflects the differences in rates of poverty in different parts of the country.
• B) It shows 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:

Operating Profits

Earnings before interest and tax (EBIT), which is the profit from a business's core operations excluding financing costs and taxes.

Profit Margin

A financial metric used to evaluate a company's profitability, calculated as net income divided by revenue.

COGS/Sales

COGS/Sales is a financial ratio that measures the cost of goods sold against the total sales revenue, often used to assess the efficiency of production.

Taxes/Sales

A ratio that shows the proportion of taxes paid relative to total sales revenue, often used in financial analysis.