The Price Relative Is a Price Index That Is Determined

question 45

Multiple Choice

The price relative is a price index that is determined by

• A)(price in period t/base period price)(100)
• B)(base period price/price in period t)(100)
• C)(price in period t + base period price)(100)
• D)(price in period t)(100)

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Definitions:

Equilibrium Quantity

The equilibrium quantity is the quantity of goods or services that is supplied and demanded at the equilibrium price, where supply equals demand.

Deadweight Loss

A reduction in economic effectiveness occurring when a good or service doesn't attain market equilibrium in an unrestricted market scenario.

Elastic Supply

A situation where the quantity supplied changes significantly in response to changes in price.

Elastic Demand

A situation where the demand for a product or service significantly changes in response to a change in price.