Question

Consider a simple economy that produces only three products: baseballs, pizzas, and tables. Using knowledge you acquired in Module 2.1, use the information in the table below to calculate your answers to the questions, Product Quantity Base Year Price (2001) Price (2018) Price (2019) Baseball 10 $1.00 $1.50 $1.75 Pizza 15 5.00 7.00 6.75 Table 08 2.00 3.00 3.50

Answer 1

classmate Cost Consumer Price Index formula of Basket in gwen year Date Page X 100 Cost of Basket Pn Base year # # Basket Includes Baseball, Pizza and Table CPI for 2001 ? Since 2001 Base year was base current year as well, year. (in CPI formula). CPI 2001) = 100 ( as numerator and denominator are equal) ♡ # cost of Basket in 2019 10 X $1.75 + 15 X 6-75 + 8 X $3.50 146.75 # Cost of Basket in 2001 = 108$1 + 15 X 45 + 8 X $2 10 + 75+ 16 = 102 CPI = 146.75 x 100 101 CPI = 145.29 So, Inflation rate is CP1 2019 CPL200 x 100 CPI 2001 X 100 146.75 – 101 jo 45-29% Inflation Mate Scanned by TapScanner