The Consumer Price Index

question 173

Multiple Choice

The consumer price index:

• A)uses a fixed market basket set in the base year for all subsequent years.
• B)is also called the GDP price index.
• C)measures changes in the prices of a market basket of some 50,000 goods and services.
• D)is adjusted annually for changes in consumer spending patterns.

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Definitions:

Lower Price

A pricing strategy involving setting a cost below the average market price to attract customers or gain market share.

Target-Return Pricing

A pricing method whereby the price is based on the amount of investment you have put into your business.

Profit Margin

A financial metric used to assess a firm's financial health by revealing the percentage of money earned as profit.

Premium Price

Pricing goods or services higher than the market average to reflect their perceived extra value or quality.