The Price Index for 2007 Is 1

question 118

Multiple Choice

The price index for 2007 is 1.28. What does this mean?

• A) It means that the average price level has increased by 128 percent over 2006.
• B) It means that the average price level has increased by 1.28 percent over the base year.
• C) It means that the average price level of the base year was 128 percent less than that in 2007.
• D) It means that the average price level has increased by 28 percent over the base year.

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Definitions:

Fixed Costs

Expenditures that do not change over a short period of time, regardless of the level of production or activity.

Break-even Point

The financial point at which total costs and total sales are equal, resulting in no net loss or gain for the business.

Variable Costs

These are costs that vary directly with the level of production or sales volume.

Budgeted Net Income

The estimated amount of money expected to be earned over a specific period after all expenses are subtracted.