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anonymous

  • 4 years ago

the price of a good increased by 5% frm 1968 to 1969,8% frm 1969 to 1970 and 77% frm 1970 to 1971.the avg increase frm 1968 to 1971 is quoted as 26% and not 30%...explain

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  1. barrycarter
    • 4 years ago
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    From 1968 to 1971, the total increase is 1.05*1.08*1.77 = 2.00718 The question is: if the rate of increase were constant, what number would it have to be to make 2.00718 (1+p)^3 = 2.00718 The answer is p=.26143 or 26% Here, you're looking for the geometric mean, not the arithmetic mean.

  2. anonymous
    • 4 years ago
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    when is the g.m used?

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