Compensating Variation Is

question 46

Multiple Choice

Compensating variation is:

• A)the change in income necessary to hold the consumer at the final level of utility as price changes.
• B)always the area under the demand curve and above the price paid.
• C)the change in income necessary to restore the consumer to the initial level of utility.
• D)the difference in the consumer's income between the purchase of the original basket and the new basket at the old prices.

---

Definitions:

Project Financing

Arrangements used to finance mainly large capital projects such as energy explorations, oil tankers, refineries, utility power plants, and so on. Usually, one or more firms (sponsors) will provide the equity capital required by the project, while the rest of the project’s capital is supplied by lenders and lessors. The most important aspect of project financing is that the lenders and lessors do not have recourse against the sponsors; they must be repaid from the project’s cash flows and the equity cushion provided by the sponsors.

Capital Investments

Funds invested in a company or organization with the expectation of achieving long-term financial gain, typically in the form of physical assets such as property, plant, or equipment.

TMX Group

A Canadian financial services company that operates multiple securities exchanges, including the Toronto Stock Exchange (TSX) and TSX Venture Exchange.

Toronto Stock Exchange

A major stock exchange in Canada, where shares of companies are bought and sold.