Table 11-6 -Refer to Table 11-6

question 331

Multiple Choice

Table 11-6. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. $$\begin{array} { l c c } \hline \text { Year } & \text { Priee of hamburegers } & \text { Prife of hat doges } \\\hline 2009 & \$ 5.00 & \$ 3.00 \\2010 & 5.50 & 3.30 \\2011 & 5.61 & 3.63 \\\hline\end{array}$$
-Refer to Table 11-6. Which of the following scenarios is consistent with this statement? "The cost of living increased by 25 percent between 2009 and 2011."

• A)The price of a hot dog was $2.24 rather than $3.00 in 2009, with other prices in the table remaining fixed.
• B)The price of a hot dog was $4.07 rather than $3.63 in 2011, with other prices in the table remaining fixed..
• C)The price of a hamburger was $4.24 rather than $5.00 in 2009, with other prices in the table remaining fixed.
• D)The price of a hamburger was $5.96 rather than $5.61 in 2011, with other prices in the table remaining fixed.

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Definitions:

Debt-to-Total-Assets Ratio

The debt-to-total-assets ratio measures the percentage of a company's assets financed by creditors, indicating the degree of financial leverage.

Du Pont Equation

A formula that breaks down the components of a company's return on equity into three parts: operating efficiency, asset use efficiency, and financial leverage.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholder's equity, indicating how well a company uses investments to generate earnings growth.

Sales

The total amount of goods or services sold by a company, a primary source of revenue for businesses.