The Equivalent Variation for an increase in the price of a good is
A) the reduction in a consumer's income necessary to harm the consumer by as much as the price increase.
B) the increase in a consumer's income necessary to eliminate the consumer's harm from a price increase.
C) the change in consumer surplus resulting from a price increase.
D) the amount of money a consumer would accept to be subject to a price increase.
A
You might also like to view...
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
In the above figure, Brendan originally consumes at point A. If his income rises and compact discs are a normal good but haircuts are an inferior good then he will begin consuming at a point such as
A) E. B) B. C) C. D) D.
In the 1970s, the U.S. economy ________
A) grew at a faster pace than in the previous decade B) experienced low inflation C) experienced increases in unemployment D) all of the above E) none of the above
The price system
A) is the voluntary exchange system used in the United States. B) is old fashioned and is no longer used. C) is used only in countries that are developing. D) is used to set resource prices only.