A Price Index Is Computed by

question 4

Multiple Choice

A price index is computed by

• A) calculating the ratio of the percentage change in price to the percentage change in output.
• B) multiplying average prices in the base year by 100.
• C) subtracting GDP in the base year from the current GDP.
• D) adding values expressed in base-year terms to current values.
• E) dividing the current cost of a set of goods by the cost of the same goods in the base year.

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Definitions:

Dominance of Markets

A situation where one or few entities exert a disproportionate control over the sales, distribution, or characteristics of goods and services in a market.

Industrial Regulation

The imposition of rules by the government on firms and industries to promote competition, control monopoly power, protect consumers, and regulate prices and service quality.

Production Costs

Expenses incurred in the process of manufacturing or producing goods, including materials, labor, and overhead costs.