Even Though Conspicuous Consumption Can Serve as a Credible Signal

question 39

Multiple Choice

Even though conspicuous consumption can serve as a credible signal of ability, it can lead to socially inefficient outcomes because:

• A)conspicuous consumption has been demonstrated to be poorly correlated with ability.
• B)conspicuous consumption is not highly correlated with earnings.
• C)conspicuous consumption can lead to positional arms races.
• D)earnings and ability are very poorly correlated.

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Definitions:

Proprietary Funds

Funds typically used in governmental accounting to account for business-like activities, where the government intends to recover costs through user charges.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity.

Parking Operations

The management and operation of parking facilities, including the planning, financing, and implementation of efficient systems to accommodate vehicles.

Enterprise Fund

A fund established by a government to account for operations financed by user charges, often used for utilities and public services.