Consider the Simplified Payment System to Compensate the Victims of 9/11

question 70

Multiple Choice

Consider the simplified payment system to compensate the victims of 9/11 for lost lifetime earnings:
• The family of a 65-year-old service worker earning $10,000 a year receives $300,000 in compensation.
• The family of a 30-year-old bond trader earning $175,000 a year receives $4.35 million.
Which statement most accurately describes the difference in the payments between the service worker and the bond trader?

• A) The present value of the bond trader's lifetime income is greater than the service worker's.
• B) Because of her age, the bond trader had less savings to rely on, so her family received more compensation.
• C) The future value of the bond trader's lifetime income is less than the service worker's.
• D) Such a discrepancy in compensation would never be the case.
• E) None of these answers is correct.

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Definitions:

Consumer Purchase Decision Process

The sequence of steps consumers go through, from recognizing a need, gathering information, evaluating options, to making a purchase decision and post-purchase evaluation.

Maslow Hierarchy

A theory in psychology proposed by Abraham Maslow in his 1943 paper "A Theory of Human Motivation", which describes a five-tier model of human needs, arranged in a hierarchy.

Social Needs

Basic human motivations included in Maslow's hierarchy, referring to the need for belongingness, love, and interpersonal relationships.

Maslow Hierarchy

A psychological theory proposed by Abraham Maslow that outlines a five-tier model of human needs, from basic (physiological) to higher needs (self-actualization).