If the Cost of the Market Basket in the Base

question 153

True/False

If the cost of the market basket in the base year is $5,000 and the cost of the market basket in the current year is $5,100, the price index for the current year is 102.

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Definitions:

Supply Equation

A mathematical formula used to describe the relationship between the price of a good or service and the quantity supplied, holding other factors constant.

Price Floor

A government- or authority-imposed minimum price that can legally be charged for a good or service.

Shortage/Surplus

A market condition where the quantity demanded exceeds supply (shortage) or supply exceeds demand (surplus), affecting prices and availability.

Demand Equation

A mathematical expression that describes the relationship between the quantity demanded of a good and its price, along with other factors like income and price of related goods.