Geometric Mean Annual Percent Increase for Production of Passenger Cars in Japan

E

There are 9 years involved. The geometric mean = [(1 + 6.74/3.94)^1/8] - 1. In words, it is the 8th square root of (1 + 6.74/3.94) minus 1. So we have GM = (1 +

1.7107)^(1/8) - 1 = 0.069 = 6.9%

To calculate the geometric mean annual percent increase, we need to find the average annual growth rate over the given period. Here's how we can calculate it:

Step 1: Calculate the total percentage increase over the given period. To find the total percentage increase, we can use the following formula:

Total percentage increase = (New Value - Old Value) / Old Value

In this case: Old Value = 3.94 million New Value = 6.74 million

Total percentage increase = (6.74 - 3.94) / 3.94 = 2.8 / 3.94 ≈ 0.7107

Step 2: Calculate the number of years between the two points. The period between 1986 and 1994 is 8 years.

Step 3: Calculate the annual growth rate. The annual growth rate can be calculated using the formula:

Annual growth rate = (1 + Total percentage increase) ^ (1 / Number of years) - 1

In this case: Total percentage increase = 0.7107 Number of years = 8

Annual growth rate = (1 + 0.7107) ^ (1 / 8) - 1 ≈ 0.0867

Step 4: Convert the annual growth rate to a percentage. Multiply the annual growth rate by 100 to get the percentage:

Annual growth rate as a percentage = 0.0867 * 100 ≈ 8.67

Therefore, the geometric mean annual percent increase is approximately 8.67%.

None of the given answer options match exactly with this result, so there may be an error in the available options. However, the closest option is E. 6.9.