An Electronics and Appliance Store Sells Three Different Brands of DVD

question 43

Short Answer

An electronics and appliance store sells three different brands of DVD recorders. The three brands sold by the store are Brand A, Brand B, and Brand C. The unit prices for the years 2005 and 2010, with the volume of sales (units sold) for 2005, are given below.
a.Compute an unweighted aggregate price index for DVD recorders with 2005 as the base period.
b.Compute a weighted aggregate price index (Laspeyres index) for 2010 with 2005 as the base period.

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Definitions:

Economic Fluctuations

Variations in the level of economic activity in an economy over a period of time, including phases of expansion and contraction.

Business Cycle

The fluctuations in economic activity that an economy experiences over a period of time, characterized by periods of expansion (growth) and contraction (recession).

Recessions

Intervals of provisional economic contraction, during which commerce and industry slow down, often indicated by a dip in GDP across two sequential quarters.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the true value of goods and services produced.