Dave knits ski caps with tassels at a negligible cost.He sells 3 percent more caps this year than last year.The market price this year is 1 percent lower than last year.Which inflation rate makes Dave as well off this year as last year?

Question

Quizplus · Accepted Answer

Dave's revenue increase from selling 3% more caps is offset by a 1% decrease in price, resulting in a net revenue increase of approximately 2%. Therefore, a 2% inflation rate would make him as well off this year as last year.

Dave Knits Ski Caps with Tassels at a Negligible Cost