In 1986, an Apple IIe Computer with 65 Kilobytes of Memory

question 40

Multiple Choice

In 1986, an Apple IIe computer with 65 kilobytes of memory cost around $1 500. Today, a $1 500 iMac computer (also made by Apple) comes with 8 gigabytes of memory. This illustrates the potential for what kind of bias in CPI calculations?

• A)new product bias
• B)substitution bias
• C)increase in quality bias
• D)outlet bias

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Definitions:

Rate of Return

The gain or loss on an investment over a specific period, expressed as a percentage of the investment's cost.

Required Return

The minimum rate of return on an investment that is necessary for it to be considered a viable option, taking into account its risk level.

IRR

In capital budgeting, the Internal Rate of Return serves as a tool for estimating the potential returns on investment projects.

Investment

The allocation of resources, usually money, into assets or projects expected to generate future returns or profit.