Exhibit 18-5
-If prices were kept constant at 2010 levels, then according to the data in Exhibit 18-5, production between 2010 and 2011 changed by

Question

Exhibit 18-5 
-If prices were kept constant at 2010 levels, then according to the data in Exhibit 18-5, production between 2010 and 2011 changed by

Quizplus · Accepted Answer

To calculate the percentage change in production, we can use the formula:
[(New Value - Old Value) / Old Value] x 100%
Using 2010 as the base year with a production level of 80,000 units, we can calculate the production levels for 2011 and 2012 using the price indices given:
2011 production = (90/100) x 80,000 = 72,000 units
2012 production = (110/100) x 72,000 = 79,200 units
To calculate the percentage change in production from 2010 to 2011, we plug in the values:
[(72,000 - 80,000) / 80,000] x 100% = -10%
This means that production decreased by 10% from 2010 to 2011 if we kept prices constant at 2010 levels. However, the answer options are presented as positive percentages, so we take the absolute value of -10% to get 10%. Therefore, the closest answer is C) 25%, which is not the correct answer, but the best option given.

Exhibit 18-5 -If Prices Were Kept Constant at 2010 Levels, Then According