Problem
Sam currently earns $30,000 a year. The government is considering a policy that would increase Sam's income by 12 percent, but raise all prices by 8 percent. What is Sam's compensating variation for the proposed policy? Can you compute it without knowing his preferences? Why or why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.