The Price Index in the First Year Is 100, in the Second

question 134

Multiple Choice

The price index in the first year is 100, in the second year is 90, and in the third year is 80. What is the deflation rate between the first and second year, and between the second and third year?

• A) 11 percent between the first and second year, 11 percent between the second and third year
• B) 11 percent between the first and second year, 12 percent between the second and third year
• C) 10 percent between the first and second year, 11 percent between the second and third year
• D) 10 percent between the first and second year, 12 percent between the second and third year

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Definitions:

MC = MR

A condition where a firm's marginal cost (MC) of producing an additional unit is equal to its marginal revenue (MR) from selling that unit, often used to determine the profit-maximizing level of production.

Costs Of Production

Costs of production refer to the total expenses incurred in the manufacturing of a product, including raw materials, labor, and overhead.

Marginal Revenue

The additional income received from selling one more unit of a product or service.

Marginal Cost

The expenditure required to create another single unit of a good or service.