A Transfer Payment for Which Recipients Qualify on the Basis

question 95

Multiple Choice

A transfer payment for which recipients qualify on the basis of income is:

• A) externality tested.
• B) nonexternality tested.
• C) means-tested.
• D) non-means-tested.

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Definitions:

Fixed Expenses

Recurring costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to a change in its sales volume, signifying the impact of fixed versus variable costs.

Variable Expenses

Costs that vary directly with the level of production or sales volume, such as raw materials, direct labor, and sales commissions.

Fixed Expenses

Costs that remain constant for a set period of time, regardless of changes in the level of production or sales volume.