A Variable-Weight Price Index

question 81

Multiple Choice

A variable-weight price index

• A)equals the value of current output at current prices divided by the value of current output at base-year prices.
• B)equals the value of a fixed basket at current prices divided by the value of a fixed basket at base-year prices.
• C)is used in the consumer price index.
• D)is misleading because it cannot distinguish between nominal and real measures.

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity of it that producers are willing and able to supply at that price.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded in the market, leading to a state of balance.

Economic Theory

A conceptual framework explaining how economies operate, including principles on production, distribution, and consumption of goods and services.

Product Supply

The total amount of a product or service that is available for purchase by consumers at a given price point and time.