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

question 80

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:

Interest Rate

The cost of borrowing money, expressed as a percentage of the total amount loaned, or the profit earned on savings and investments.

Money Market Equilibrium

The state where the supply of and the demand for money balances, resulting in economic stability at a given interest rate.

Interest Rate

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal, or the amount earned by an investment.

Quantity of Money

The total amount of money in circulation or in existence in a country or the economy at a specific time.