Firms A, B, and C Operate in the Market for Computers

question 114

Multiple Choice

Firms A, B, and C operate in the market for computers. Each firm's product is popular in the market and distinct from what the other firms offer. The following table shows the prices of laptops from 2005 through 2007. If 2006 is used as the base year, which of the following statements is true?

• A) The prices in 2007 were 5.02% lower than the prices in 2005.
• B) The price index for 2005 will be 100, as per the unweighted price index.
• C) The unweighted price index for 2007 suggests that laptop prices were 8.17% lower than the prices in 2006, as per the unweighted price index.
• D) The laptop prices in 2005 were 3.48% higher than the prices in 2006, as per the unweighted price index.

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Definitions:

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Systematic Bias

A consistent and pervasive error in judgment or procedure that leads to inaccurate conclusions or assessments, often resulting from a particular perspective or methodology.

Confirmation Bias

Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Principle Of Falsifiability

The principle that a scientific theory must make predictions that are specific enough to expose the theory to the possibility of disconfirmation; that is, the theory must predict not only what will happen but also what will not happen.