The amount of money one would have to take from a consumer to harm her by as much as the price increase is called
A) compensating variation.
B) structured settlement.
C) equivalent variation.
D) consumer surplus.

Question

Quizplus · Accepted Answer

The term describing the amount of money a consumer would need to be given to fully offset the harm caused by a price increase is called equivalent variation. This is in contrast to compensating variation, which describes the amount of money a consumer would need to be given to fully offset the harm caused by a price decrease. Structured settlement refers to a financial agreement in which a plaintiff receives payments over time instead of a lump sum, and consumer surplus refers to the difference between what a consumer is willing to pay for a good or service and what they actually pay.

The Amount of Money One Would Have to Take from a Consumer