Question 5: 2018 is the base year
a. Cost of basket in 2018 = Sum of (price of 2018* quantity) =
(4*1) + (1*2) + (2*2) + (0.5*4) + (4*2) + (2*4) + (1*6) + (10*1) +
(0.6*10) = 4 + 2 + 4 + 2 + 8 + 8 + 6 + 10 + 6 = $50
EBPI for 2018 = (Cost of basket in 2018/Cost of basket in base
year)*100 = (50/50)*100 = 100
b) Cost of basket in 2019 = Sum of (price of 2019* quantity) =
(5*1) + (2*2) + (3*2) + (1*4) + (6*2) + (3*4) + (2*6) + (15*1) +
(1*10) = 5 + 4 + 6 + 4 + 12 + 12 + 12 + 15 + 10 = $80
EBPI for 2019 = (Cost of basket in 2019/Cost of basket in base
year)*100 = (80/50)*100 = 160
c) Inflation rate = [(EBPI for 2019-EBPI for 2018)/EBPI for 2018]*100 = [(160-100)/100]*100 = 60%
5. Suppose that while sitting around bored in your dorm room one night, you and your...
5. Suppose that you and your dorm mates decide to construct a Halloween Party Price Index. After careful research you have come up with the following information: Halloween Party Price Index item quantity price in 2018 price in 2019 36 oz. bag of candy bars 4 $2.00 $4.75 gallon of apple cider 2 $2.50 $3.00 one-half keg of beer 1 $90.00 $100.00 Teenage Mutant Ninja Turtles costumes 4 $14.00 $18.00 16 oz. plastic cups 100 $0.03 $0.05 13 oz. bag...
5. Suppose that you and your dorm mates decide to construct a Halloween Party Price Index. After careful research you have come up with the following information: Halloween Party Price Index item quantity price in 2018 price in 2019 36 oz. bag of candy bars 4 $2.00 $4.75 gallon of apple cider 2 $2.50 $3.00 one-half keg of beer 1 $90.00 $100.00 Teenage Mutant Ninja Turtles costumes 4 $14.00 $18.00 16 oz. plastic cups 100 $0.03 $0.05 13 oz. bag...