Here Are Three Possible Definitions of "Compensating Variation

question 10

Multiple Choice

Here are three possible definitions of "Compensating Variation":
I.the amount a person would be willing to pay to avoid a price increase.
II.the amount of additional income needed to allow a person to restore his or her utility back to its initial level after it has been reduced by a price increase.
III.the amount of income that a person who experienced a price increase would be willing to pay to see the price return to its earlier level.
Which of these definitions is (are) correct?

• A)​Only I
• B)​I and II
• C)​II and III
• D)​Only III

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Definitions:

Lateral Hypothalamus

A region in the brain known as the hunger center; it plays a significant role in promoting feeding and drinking behavior.

Overeating

The consumption of food in quantities greater than the body's energy requirements, often leading to weight gain and potential health issues.

Undereating

The consumption of insufficient food, which can lead to nutritional deficiencies and health problems.

Obesity

A medical condition involving an excessive amount of body fat, increasing the risk of health problems.