Using the Price of the Following Food Items,compute the Aggregate

question 67

Essay

Using the price of the following food items,compute the aggregate index numbers for the four types of cheese.Let 1990 be the base year for this market basket of goods.

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Definitions:

Long-run Average Total Cost

The per-unit cost of production when all inputs, including those typically fixed, can be varied, showing economies of scale if downward sloping.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost of production falls with increasing output.

Constant Returns to Scale

A situation in production where increasing the input of all resources by any proportion yields an increase in output by the same proportion.

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, assuming optimal efficiency.