The Price of a New Textbook Increased from $100 to $120

question 72

Multiple Choice

The price of a new textbook increased from $100 to $120 in one year, while the price of a used textbook increased by 20 percent. What happened to the relative price of a used textbook?

• A) It decreased by 25 percent.
• B) It increased by 20 percent.
• C) It remained constant.
• D) It can't be determined without knowing the nominal price of the used textbook in at least one of the years.

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Definitions:

Carrying Cost

The total cost associated with holding inventory, including storage, insurance, taxes, and potential obsolescence.

Credit Collections

The process of pursuing payments of debts owed by individuals or businesses, typically undertaken by a department or agency.

Required Return

The minimum return an investor expects to achieve on an investment to consider it worthwhile.