Martha Has Noticed That the CPI Has Increased by 7

question 19

Multiple Choice

Martha has noticed that the CPI has increased by 7% over the past year.What is the best conclusion for Martha to make based on this information?

• A)Her cost of living has increased by 7%.
• B)The price of necessities such as food, rent, and medicine has increased by an average of 7%.
• C)Her income has increased by 7%.
• D)The weighted average of prices of goods and services in a market basket bought by a typical consumer has increased by 7%.

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Definitions:

Break-even Point

The point at which total costs equal total revenue, resulting in no net loss or gain for the business.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Fixed Costs

Costs that do not change in total despite changes in the volume of goods or services produced or sold.

Margin of Safety

The difference between actual or projected sales and the break-even point. It measures the amount by which sales can decline before a business incurs a loss.