1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
WINSTONCH [101]
3 years ago
15

The consumer price index (CPI) can be used to measure inflation. There are potential problems with this process though that can

result in inflation being overstated or understated. Sort each statement according to whether it would cause inflation to be overstated, understated, or would give an accurate representation of inflation.
a. Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS and better fuel economy.
b. Donna, a confirmed chocoholic, notices that her favorite candy bar shrank in size, but its price stayed the same.
c. Zach loves bagels, but bagels are becoming more expensive so he changes his breakfast routine to include a muffin instead because muffins remain relatively cheap.
d. Chris is an avid runner. He is loyal to one particular brand and buys a new pair of the same shoes every few months. The price of his shoes has doubled in the last 15 years.
Business
1 answer:
DIA [1.3K]3 years ago
6 0

Answer:

a. Overstates Inflation.

In the case of Mary and Bob, the CPI would have already increased but in this case the price of the minivan increased as well. This will overstate inflation because it will not measure the general rise in price alone (inflation), it will also measure the rise in price as a result of the new minivan having better features.

b. Understated Inflation

Donna's case represents an understated inflation because the quantity shrank yet the price stayed the same. This means that the price is now buying less quantity than it used to which is inflation because more dollars are now required to buy the previous amount. This was not however recorded as there was no change in price.

c. Overstates Inflation

In the case of Zach, the inflation will be overstated because Zach is no longer buying bagels and is now buying muffins so continuing to use bagels as a representative good in the basket of goods used to calculate CPI would be overstating it.

d. Accurate representation of Inflation

In Chris's case, the increase in the price of the same shoe over the years has been because of a general rise in prices and not because it is a different model. It is the same shoe and its price is rising generally so this is an accurate depiction of inflation.

You might be interested in
A few weeks after marion had her phone number changed, she wrongly gave out her former phone number. the most likely explanation
LiRa [457]
The correct answer is proactive interference.

Proactive interference refers to the phenomenon wherein, old memories get in the way of or interfere with retaining and retrieving new memories. In this instance, Marion's old memory of her former phone number is interfering with her ability to retrieve the memory of her (newer) current phone number.
5 0
3 years ago
A company sells a product for $3. Direct materials are $1.80 per unit. The company prepares a flexible budget at two sales volum
strojnjashka [21]

Answer:

$150 for budgeted direct materials and $180 for budgeted direct materials.

Explanation:

You take direct materials of 1.80 x sales volume of 50 units= budgeted direct material $90

To find a sales volume of 60 units, you take $1.80 of direct material X sales volume of 60 units= budgeted direct material of 108.

3 0
2 years ago
Sparkling Water, Inc., expects to sell 3.7 million bottles of drinking water each year in perpetuity. This year each bottle will
MrRa [10]

Answer:

$39,345,664.93

Explanation:

The computation of the company worth today is as follows:

Present value of revenues after tax is

= $3,700,000 × 1.46 × (1 - 0.25) ÷ (0.07 - 0.018)

= $77,913,461.54

And, Present value of costs after tax is

= $3,700,000 × 0.82 × (1 -0.25) ÷ (0.07-0.011)

= $38,567,796.61

So, the company worth today is

=  $77,913,461.54 - $38,567,796.61

= $39,345,664.93

3 0
3 years ago
When working on a major project which is not a good step for keeping the overall scope in mind
Sladkaya [172]
Yeah I’m John quiñones
4 0
3 years ago
Read 2 more answers
When the market rate is 8%, a company issues $50,000 of 9%, 10-year bonds and pay interest semiannually for a selling price of $
Gre4nikov [31]

Answer:

casate conmigo cikitita

Explanation:

marry me little girl

6 0
3 years ago
Other questions:
  • GNP accounts avoid double counting by including only the value of final goods and services sold on the market. Should the measur
    6·1 answer
  • Identify the financial instruments based on the following descriptions.(a) Backed by the U.S. government, these financial instru
    10·1 answer
  • An installment note payment includes a.interest. b.principal plus interest. c.principal. d.None of these choices are correct.
    12·1 answer
  • The printer ran out of preprinted sales invoice forms and several sales invoices were not printed. The best internal control to
    14·1 answer
  • The exchange rate for converting the U.S. dollar into other currencies is continuously adjusted depending on the laws of supply
    13·1 answer
  • Are freight charges contra-asset?​
    13·1 answer
  • B) Assume you are a brand manager of a clothing brand that offers formal clothing for
    14·1 answer
  • Statz Company had sales of $1,800,000 and related cost of goods sold of $1,150,000 for its first year of operations ending Decem
    11·1 answer
  • Rearrange the following contributors to the growth of productivity in descending order of their quantitative importance:______.
    14·1 answer
  • The central bank of the united states performs many functions, one of which is that it?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!