If 2008 Is the Base Year and the Price Index

question 95

Multiple Choice

If 2008 is the base year and the price index in 2009 is 109,prices in 2009 are _____ than prices in 2008.

• A)1 percent higher
• B)8 percent higher
• C)9 percent higher
• D)0.9 percent higher
• E)12 percent higher

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Definitions:

Operating Leverage

The extent to which a company can increase operating income by increasing revenue, attributable to the proportion of fixed costs in total costs.

Fixed Expenses

Costs that remain constant in total over a specified period, regardless of changes in the level of activity or volume of output.

Unit Variable Cost

The variable cost incurred to produce one unit of a product, such as materials or labor.

Net Operating Income

The profitability of a company's core business operations, calculated as gross profit minus operating expenses, excluding interest and taxes.