Your Entertainment Price Index (EPI)was Computed Based on Three Goods

question 112

Multiple Choice

Your entertainment price index (EPI) was computed based on three goods: movie tickets,popcorn,and limeade.If you change the quantity of these goods from this year to next year and the prices of two of the three goods increase while the other price falls,then your EPI

• A) would definitely fall during the year in question if,and only if,you buy less of all the goods in question.
• B) would definitely rise during the year in question because two of the three goods became more expensive.
• C) might rise or fall,contingent on both the quantity of the goods that you bought and the prices of these goods.
• D) might rise or fall,contingent only on the quantity of the goods that you bought and regardless of the prices of these goods.
• E) might rise or fall,contingent only on the percentage of the market basket that these goods constituted and the percentage that each good occupied within the basket,regardless of the quantity change from year to year.

---

Definitions:

Subsidy

A financial contribution granted by the government or a public body to help an industry or business keep the price of a commodity or service low.

Marginal Costs

The increase in cost resulting from the manufacture of one additional unit of a good or service.

Decreasing Costs

Situations in which costs diminish as the level of production or scale of operations increases.

Efficiency

The extent to which time, effort, or cost is well-used for the intended task or purpose.