Using the Notation P_t to Designate This Period's Price Level

question 303

Multiple Choice

Using the notation P_t to designate this period's price level and P_t-1 to designate last period's price level, the formula for measuring the inflation rate from last period to this period is

• A) [(P_t - P_{t - 1}) / P_t] × 100.
• B) [(P_{t -1} - P_t) / P_{t - 1}] × 100.
• C) [(P_t - P_{t - 1}) / P_{t - 1}] × 100.
• D) [(P_{t -1} - P_t) / P_t] × 100.

---

Definitions:

Total Revenue

The total revenue produced from the sales of products or services that are central to a company's main business activities.

Unit Elastic

Describes a situation in which the percentage change in quantity demanded or supplied is equal to the percentage change in price, resulting in no change in total revenue.

Total Revenue

The total income generated by a firm from the sale of its goods and services.

Price Elasticity

An index that measures the reaction of how much a good is wanted to a price adjustment of that good.