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

question 110

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. Suppose this data was collected from a particular town,where people have a preference for firm C's laptops.If 2005 is used as the base year,which of the following statements will be true?

• A) The unweighted price index for 2007 understates the fall in the prices of laptops.
• B) The unweighted price index for 2006 overstates the fall in the prices of laptops.
• C) The unweighted price index should only use the data for laptops produced by firms A and B to provide an accurate picture of the change in prices.
• D) The unweighted price index will better reflect the change in prices over these years than a weighted price index.

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Definitions:

Havighurst

A developmental psychologist who introduced the concept of developmental tasks - a series of skills and competencies that individuals are expected to master as they move through different stages of life.

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Choosing to live without engaging in sexual activities or entering into sexual relationships, potentially for various personal or lifestyle reasons.

Ego Identity

A sense of oneself as a distinct, continuous entity with a set of beliefs, abilities, and needs.

Attraction-Similarity Hypothesis

A theory suggesting that people tend to be attracted to others who are similar to themselves in terms of attitudes, values, and beliefs.