The Compensating Variation for an Increase in the Price of a Good

question 31

Multiple Choice

The Compensating Variation for an increase in the price of a good is

• A)the minimum amount of money a consumer would accept to voluntarily accept the price increase.
• B)the maximum amount of money a consumer would pay to avoid the price increase.
• C)the change in consumer surplus resulting from a price increase.
• D)the change in utility resulting from the increase in price.

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, driven by international trade and investment and aided by information technology.

Interdependence

The extent to which employees depend on other members of their team to carry out their work effectively.

New Economy

A term referring to the shift from traditional industry to an economy based on information technology and services.

Prejudice

The display of negative, irrational attitudes toward members of diverse populations.