A Price Relative Was Computed for Houses

question 15

Multiple Choice

A price relative was computed for houses. The base period is 2010. The price relative in 2015 was 140. The interpretation of the price relative is that

• A) there has been a 140% increase in the price of houses from 2010 to 2015.
• B) there has been a 40% increase in the price of houses from 2010 to 2015.
• C) the price of houses in 2015 was $140 higher than the price in 2010.
• D) It is impossible to interpret the index.

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Definitions:

Uncertain Income

Income that is not guaranteed and can vary significantly from period to period, often depending on factors like market demand or job security.

Marginal Utility

The bonus utility or pleasure experienced by someone when consuming another unit of a given good or service.

Risk-averse

A description of an individual's or entity's preference for avoiding loss over making a gain.

Expected Income

The income an individual anticipates to earn in the future based on current circumstances, potential investments, and employment prospects.