Use the Following to Answer Questions

question 53

Multiple Choice

Use the following to answer questions:
Scenario: Price Index
Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50.
-(Scenario: Price Index) Look at the scenario Price Index. The change in prices from the first to the second month is:

• A)1.1%.
• B)94%.
• C)6.4%.
• D)-6%.

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Definitions:

Short-Run Supply

The supply of goods or services that businesses can produce or provide with their current resources and capacities in a short time frame.

Purely Competitive

A market structure characterized by many sellers offering identical products or services, leading to a scenario where no single seller can influence market price.

AVC Curve

The graphical representation of the Average Variable Cost of production as it relates to output levels.

Short Run

A time period in economics during which at least one input, such as plant size, is fixed and cannot be changed.