The Price of a New Textbook Increased from $60 to $75

question 197

Multiple Choice

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

• A)It increased by 25 percent.
• B)It increased by 10 percent.
• C)It remained constant.
• D)It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

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Definitions:

Expected-Utility Maximizer

An economic concept referring to an individual who chooses between uncertain prospects by comparing their expected utilities.

Bet

A wager or gamble where an individual risks a certain amount of money or valuables on the outcome of an uncertain event.

Random Variable

A variable whose possible values are outcomes of a random phenomenon, often used in probability and statistics.

Soft Drink

A non-alcoholic beverage usually carbonated, sweetened, and flavored, including sodas and cola drinks.