If the Price Index Is P₁ in Year 1 and P₂

question 36

Multiple Choice

If the price index is P₁ in year 1 and P₂ in year 3,the average inflation rate per year over this period is calculated as

• A)(P₂ - P₁)× (100/2).
• B)[(P₂ - P₁)/P₁] × 100.
• C)[(P₂ - P₁)/P₁] × [100/2].
• D)[(P₁ - P₂)/P₂] × 100.
• E)[(P₁ - P₂)/P₂] × [100/2].

Clarify the conditions under which a firm decides to shut down or continue operating despite losses.

Differentiate between average, total, and marginal revenue and their roles in firm operations and decision making.

Explain the concept and implications of pure competition on price setting, output levels, and firm strategies.

Understand the concept and purpose of sinking funds and scenarios for their optimal utilization or cessation.

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