Homework Answers
Question 3
(a)
Calculate the value of the market basket in 2018 -
Value of the market basket = [Quantity of oranges * Price of oranges] + [Quantity of apples * Price of apples] + [Quantity of bananas * Price of bananas]
Value of the market basket = [200 * $0.40] + [100 * $0.25] + [100 * $0.40]
Value of the market basket = $80 + $25 + $40 = $145
The value of the market basket in 2018 was $145.
The base year is 2018.
So, the value of market basket in base year is $145.
Calculate the value of the price index in 2018 -
Price index = [Value of the market basket in 2018/Value of the market basket in base year] * 100
Price index = [$145/$145] * 100 = 100
The value of the price index in 2018 was 100.
(b)
Calculate the value of the market basket in 2019 -
Value of the market basket = [Quantity of oranges * Price of oranges] + [Quantity of apples * Price of apples] + [Quantity of bananas * Price of bananas]
Value of the market basket = [200 * $0.40] + [100 * $0.40] + [100 * $0.50]
Value of the market basket = $80 + $40 + $50 = $170
The value of the market basket in 2019 was $170.
The value of market basket in base year is $145.
Calculate the value of the price index in 2019 -
Price index = [Value of the market basket in 2019/Value of the market basket in base year] * 100
Price index = [$170/$145] * 100 = 117.24
The value of the price index in 2019 was 117.24
(c)
Calculate the rate of inflation between 2018 and 2019 -
Rate of inflation = [(Price index in 2019 - Price index in 2018)/Price index in 2018] * 100
Rate of inflation = [(117.24 - 100)/100] * 100 = 17.24%
The rate of inflation between 2018 and 2019 in this economy is 17.24%.
(d)
Minimum wage in 2018 = $9.50
The minimum wage increases at the rate of the increase in price level.
The price level has increased by 17.24%.
Increase in minimum wage = $9.50 * 0.1724 = $1.64
Calculate the minimum wage at the end of 2019 -
Minimum wage = Minimum wage in 2018 + Increase in minimum wage
Minimum wage = $9.50 + $1.64 = $11.14
Thus,
The minimum wage at the end of 2019 would be $11.14
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## Table for Question 3 | Oranges Apples Bananas L Price in 2018 $0.40 $0.25 $0.40...
1 Base Year Fruit Apples Bananas 7,000 bunches Oranges Quantity Price $2 per bag $3 per...
1
Base Year Fruit Apples Bananas 7,000 bunches Oranges Quantity Price $2 per bag $3 per bunch $5 per bag 4,000 bags 7,000 bags Current Year Fruit Quantity Apples Bananas 15.000 bunches Oranges Price $3 per bag $2 per bunch $7 per bag 5,000 bags 28,000 bags Consider an economy that produces only three types of fruit: apples bananas, and oranges. In the base year (a few years ago), the production and price data are listed in the tables to...
2 3 Consider an economy that produces only three types of fruit: apples bananas, and oranges....
2
3
Consider an economy that produces only three types of fruit: apples bananas, and oranges. In the base year (a few years ago), the production and price data are listed in the tables to the right. Base Year Quantity Fruit Apples Bananas 5,000 bunches Oranges Price 3,000 bags In the base year, nominal GUP was s In the current year, nominal GDP is $ (Round both answers to the nearest whole number.) $2 per bag $3 per bunch $5...
3. Ramon has $100 to spend on apples and bananas. The price of apples is $4...
3. Ramon has $100 to spend on apples and bananas. The price of apples is $4 a pound and the price of bananas is $2 a pound. The graph below represents Ramon's budget line with his consumption of apples on the Y-axis and his consumption of bananas on the X-axis. Homework 2: Problem Set 2 Apples (pounds) BL1 Bananas (pounds) (a) On the graph above: Add the intercepts of BL . Assuming that Ramon chooses to purchase 20 pounds of...
3. Consider an economy that produces oranges and boomerangs. The prices and quantities of these goods...
3. Consider an economy that produces oranges and boomerangs. The prices and quantities of these goods in two different years are reported in the table below. Fill in the missing entries. % change 2017-18 Quantity of oranges Quantity of boomerangs Prices of oranges (dollars) Prices of boomerangs (dollars) 3 Nominal GDP Real GDP in 2017 prices 2017 100 20 2018 108 30 1.10 3.15 Real GDP in 2018 prices 4. a. Using the data in Question 3, calculate the rate...
Please help. Thank you!!! 1. A certain economy produces only 2 goods, apples and bananas. The...
Please help. Thank you!!!
1. A certain economy produces only 2 goods, apples and bananas. The quantity produced and price of each is given below in several years. Apples-Q 50 60 70 Apples-P 6 7 8 Bananas-Q 100 105 110 Year 2001 2002 2003 Bananas-P 1.5 Let the CPI basket be 1 apple and 2 bananas. Using 2002 as the base year. Calculate the CPI NGDP and RGDP for each year a. b. What causes inflation?
Question 13 (8 points) The economy produces only two general types of products: Apples, and Bananas....
Question 13 (8 points) The economy produces only two general types of products: Apples, and Bananas. Price and Quantity information of these items over a period are shown below: Year 2019 Product Output Unit Average Price per Output Apples 7 $10 12 Bananas 16 15 7 Using year 2020 as the base year, Year 2020 Average Price per Unit $16 20 %. Growth rate of Nominal GDP from year 2019 to year 2020 is (Cut off at the first decimal...
The below table shows a basket of hypothetical goods the typical college student purchased from 2016...
The below table shows a basket of hypothetical goods the typical college student purchased from 2016 to 2018. 2a. What is the amount spent each year on the "basket" of goods with the quantities shown in column 2? Item 2017 $0.75 $0.40 $0.90 $2.15 2b. Construct the price index for a "basket" of college student goods in each year using 2016 as Qty 2016 2018 $0.50 $0.40 $0.70 $1.90 $0.85 $0.40 Good 1 4 Good 2 6 $0.95 $2.25 Good...
Q1) Q2) Q3) Imagine that Canada produces only three goods: apples, bananas, and carrots. The quantities...
Q1)
Q2)
Q3)
Imagine that Canada produces only three goods: apples, bananas, and carrots. The quantities produced and the prices of the three goods are listed below: Quantities produced 5 Goods Apples Bananas Carrots Prices ($) 2.00 1.00 10 20 1.50 Instructions: Round your answers to the nearest dollar. a. Canadian GDP is $ b. Suppose a drought hits the province of British Columbia. This drought causes the quantity of apples produced to fall to 2. Assuming that all prices...
Calculate a price index for 2018, 2019, 2020 using the following information about prices. Let the...
Calculate a price index for 2018, 2019, 2020 using the following information about prices. Let the market basket consist of the price of one pizza pie, two sodas, and four caffe lattes. Let the year 2018 be the base year (with an index value of 100). Year Price of a pizza Price of a Soda Price of a Caffe Latte 2018 $5.00 2019 $5.50 2020 $6.00 $0.50 $0.55 $0.65 $1.50 $2.50 $3.00 A. Calculate the price index for each year...
Question 2 (15 Marks) Table below shows the price for basket of two goods, meat and...
Question 2 (15 Marks) Table below shows the price for basket of two goods, meat and fish. Year Price of meat (RM/kg) Price of fish (RM/kg) 2017 10 12 2018 12 15 2019 14 18 A. Compute the cost of the basket for 2017, 2018 and 2019. (6 marks) B. Using year 2017 as the base year, compute the CPI for 2017, 2018 and 2019. (6 marks) C. Compute inflation rate for 2019. (3 marks)
1
Base Year Fruit Apples Bananas 7,000 bunches Oranges Quantity Price $2 per bag $3 per bunch $5 per bag 4,000 bags 7,000 bags Current Year Fruit Quantity Apples Bananas 15.000 bunches Oranges Price $3 per bag $2 per bunch $7 per bag 5,000 bags 28,000 bags Consider an economy that produces only three types of fruit: apples bananas, and oranges. In the base year (a few years ago), the production and price data are listed in the tables to...
2
3
Consider an economy that produces only three types of fruit: apples bananas, and oranges. In the base year (a few years ago), the production and price data are listed in the tables to the right. Base Year Quantity Fruit Apples Bananas 5,000 bunches Oranges Price 3,000 bags In the base year, nominal GUP was s In the current year, nominal GDP is $ (Round both answers to the nearest whole number.) $2 per bag $3 per bunch $5...
3. Ramon has $100 to spend on apples and bananas. The price of apples is $4 a pound and the price of bananas is $2 a pound. The graph below represents Ramon's budget line with his consumption of apples on the Y-axis and his consumption of bananas on the X-axis. Homework 2: Problem Set 2 Apples (pounds) BL1 Bananas (pounds) (a) On the graph above: Add the intercepts of BL . Assuming that Ramon chooses to purchase 20 pounds of...
3. Consider an economy that produces oranges and boomerangs. The prices and quantities of these goods in two different years are reported in the table below. Fill in the missing entries. % change 2017-18 Quantity of oranges Quantity of boomerangs Prices of oranges (dollars) Prices of boomerangs (dollars) 3 Nominal GDP Real GDP in 2017 prices 2017 100 20 2018 108 30 1.10 3.15 Real GDP in 2018 prices 4. a. Using the data in Question 3, calculate the rate...
Please help. Thank you!!!
1. A certain economy produces only 2 goods, apples and bananas. The quantity produced and price of each is given below in several years. Apples-Q 50 60 70 Apples-P 6 7 8 Bananas-Q 100 105 110 Year 2001 2002 2003 Bananas-P 1.5 Let the CPI basket be 1 apple and 2 bananas. Using 2002 as the base year. Calculate the CPI NGDP and RGDP for each year a. b. What causes inflation?
Question 13 (8 points) The economy produces only two general types of products: Apples, and Bananas. Price and Quantity information of these items over a period are shown below: Year 2019 Product Output Unit Average Price per Output Apples 7 $10 12 Bananas 16 15 7 Using year 2020 as the base year, Year 2020 Average Price per Unit $16 20 %. Growth rate of Nominal GDP from year 2019 to year 2020 is (Cut off at the first decimal...
The below table shows a basket of hypothetical goods the typical college student purchased from 2016 to 2018. 2a. What is the amount spent each year on the "basket" of goods with the quantities shown in column 2? Item 2017 $0.75 $0.40 $0.90 $2.15 2b. Construct the price index for a "basket" of college student goods in each year using 2016 as Qty 2016 2018 $0.50 $0.40 $0.70 $1.90 $0.85 $0.40 Good 1 4 Good 2 6 $0.95 $2.25 Good...
Q1)
Q2)
Q3)
Imagine that Canada produces only three goods: apples, bananas, and carrots. The quantities produced and the prices of the three goods are listed below: Quantities produced 5 Goods Apples Bananas Carrots Prices ($) 2.00 1.00 10 20 1.50 Instructions: Round your answers to the nearest dollar. a. Canadian GDP is $ b. Suppose a drought hits the province of British Columbia. This drought causes the quantity of apples produced to fall to 2. Assuming that all prices...
Calculate a price index for 2018, 2019, 2020 using the following information about prices. Let the market basket consist of the price of one pizza pie, two sodas, and four caffe lattes. Let the year 2018 be the base year (with an index value of 100). Year Price of a pizza Price of a Soda Price of a Caffe Latte 2018 $5.00 2019 $5.50 2020 $6.00 $0.50 $0.55 $0.65 $1.50 $2.50 $3.00 A. Calculate the price index for each year...
Question 2 (15 Marks) Table below shows the price for basket of two goods, meat and fish. Year Price of meat (RM/kg) Price of fish (RM/kg) 2017 10 12 2018 12 15 2019 14 18 A. Compute the cost of the basket for 2017, 2018 and 2019. (6 marks) B. Using year 2017 as the base year, compute the CPI for 2017, 2018 and 2019. (6 marks) C. Compute inflation rate for 2019. (3 marks)
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