If a Hershey's Chocolate Bar Cost $0

question 114

Multiple Choice

If a Hershey's chocolate bar cost $0.05 in 1921 when the price index was 18 and the same size and weight Hershey's chocolate bar cost $0.05 in 1955 when the price index was 27,then:

• A) the inflation-adjusted price of the bar would be much lower than the actual price for both years.
• B) the inflation-adjusted price of the bar would be much higher than the actual price for both years.
• C) Hershey's has mispriced the bar due to a price confusion problem.
• D) the United States must have experienced deflation during the period from 1921-1955.
• E) menu costs for Hershey's were high.

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Definitions:

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of income. This usually occurs with corporate income taxed at both the corporate level and again at the shareholder level on dividends.

Disadvantage

A condition or situation that makes it more difficult for someone or something to succeed or achieve a desired outcome.

Income Taxes

Taxes levied by governments on the income earned by individuals and entities within their jurisdiction.

No-Par Common Stock

A type of common stock that is issued without a par value, meaning its value is not fixed in the corporate charter.