Assume the Price of Salt Increased from $0

question 172

Multiple Choice

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995.If we calculate the average rate of price increase for salt over this period,we could accurately say the

• A) price of salt increased at about a 40 percent rate per year during this period.
• B) price of salt increased at about a 20 percent rate per year during this period.
• C) price of salt increased by about 20 percent total during this period.
• D) price of salt increased at about a 5 percent rate per year during this period.
• E) real price of salt definitely increased during the period.

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Definitions:

Product Differentiation

Is the process of distinguishing a product or service from others to make it more attractive to a particular target market.

Oligopoly

A market structure dominated by a few large firms, resulting in limited competition and often leading to higher prices for consumers.

Price Searchers

Firms or individuals who determine the price of their goods or services based on market conditions, often with some degree of market power.

Oligopolistic Industry

An industry structure characterized by a small number of firms dominating the market, often leading to strategic interactions in setting prices and output.