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.

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Definitions:

Relative Frequency Histogram

A type of histogram that displays the relative frequencies, which are the proportions or percentages, of data points in consecutive intervals.

Class Interval

A range of values within which data points in a dataset are grouped for the purposes of frequency distribution.

Frequency Distribution

A summary of how often each value in a set of data occurs.

Relative Frequency Distributions

Statistical tools used to describe the number of times a particular value occurs in relation to the total number of values.