Which of the Following Is the Correct Interpretation of a Laspeyres

question 24

Multiple Choice

Which of the following is the correct interpretation of a Laspeyres price index of 135, where the base year is 2007 and the current year is 2010?

• A)According to the Laspeyres price index, prices have risen by 35% from 2007 to 2010.
• B)According to the Laspeyres price index, prices have risen by 135% from 2007 to 2010.
• C)According to the Laspeyres price index, prices have risen by 35% from 2010 to 2007.
• D)None of these choices are correct.

---

Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various prices.

Supply Curve

A graphical representation of the relationship between the price of a good and the amount of it that producers are willing to supply.

Equilibrium Price

The market price at which the supply of an item matches its demand, resulting in an efficient market condition where there is no excess supply or demand.

Inverse Demand Function

A mathematical function that expresses price as a function of quantity demanded, depicting how the market price of a good will adjust to balance demand with supply.