A Price Index

question 48

Multiple Choice

A price index

• A)is a mechanism to compare all prices in two different years.
• B)is the ratio of the price of a market basket in one year to the price of the market basket in the previous year times 100.
• C)is the ratio of the price of a market basket in one year to the price of the market basket in a base year times 100.
• D)is a mechanism to compare all prices in two different years and the ratio of the price of a market basket in one year to the price of the market basket in the previous year times 100.

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Definitions:

Apple Consumption

Refers to the quantity of apples eaten or utilized over a specified period of time.

Substitution Effect

refers to the change in consumption patterns due to a change in relative prices, leading consumers to substitute more expensive goods with cheaper alternatives.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household within a specified period.

Demand Change

Variations in the quantity of a product that consumers are willing and able to purchase at various price levels over a period.