Suppose the Average Price of Gas in 2009 Was $0

question 63

Multiple Choice

Suppose the average price of gas in 2009 was $0.95 per litre and $0.97 in 2010. The inflation rate was 3 percent in 2010. What was the 2010 price of gas in 2009 dollars?

• A)$0.922
• B)$0.941
• C)$0.978
• D)$0.999

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Definitions:

Average Cost

The average cost is the total cost of production divided by the number of units produced, reflecting the cost per unit of output.

Marginal Cost

The supplementary expenditure required to produce an extra unit of a product or service.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Decreasing Returns

A condition in economics where adding more input (like labor or capital) leads to progressively smaller increases in output.