Assume people consume only two goods, college textbooks and coffee. The market b

Question

Assume people consume only two goods, college textbooks and coffee. The market basket used to compute the CPl in this case, consists of 4 units of textbooks and 20 units of coffee 2012 price per unit $150 2017 price per unit $175 Textbooks Coffee $1.50 $2.00 SoxI.SO 27. Refer to the table above. Calculate the percent change in textbooks from 2012 to 2016, and calculate the percent change in food from 2012 to 2017: %2 in price of textbooks is 12.2S%, and % in price of food is 25% b, % in price of textbooks is 16.67%, and % in price of food is 33.3% %2 in price of textbooks is 13.75% and % in price of food 18.5% d. % in price of textbooks is 14.25%, and in price of food is 22.5% 28. Refer to the table above and the last problem. Inflation makes some people relatively better off and some people relatively worse off. Redistribution happens because the price of textbooks and of coffee did not rise at the same rate. In this case, a person who buys mostly relatively better off, while a person who buys mostly would be relatively worse off. would be a. Coffee; Textbooks Textbooks; Coffee 29. Refer to table above. Compute the cost of the market basket in 2012 and in 2017 in the space below The cost of the market basket for 2012 is $630, cost of the market basket for 2017 is $740. The cost of the market basket for 2012 is $640; cost of the market basket for 2017 is S830. The cost of the market basket for 2012 is $710; cost of the market basket for 2017 is $775. The cost of the market basket for 2012 is $800; cost of the market basket for 2017 is $860. a. c. d. 30. Refer to the last problems. Compute the CPl in 2012 and 2016. Use 2012 as the base year: a. CPl in 2012 100, CPI in 2016 117.46 CPI in 2012 -100, CPI in 2016-107.50 c. CPI in 2012 = 112, CPI in 2016s 109.58 d. CPI in 2012 100, CPl in 2016- 116.33 31. Refer to the last problem. The inflation rate from 2012 to 2016 is d. 17.46% 7.5% 9.58% c. 16.33% a.

Explanation / Answer

27.

% change in price = (P2-P1)/P1

Change in textbook price = (175-150)/150 = 16.67%

Change in coffee price = (2-1.5)/1.5 = 33.33%

Thus correct option: (B)

29.

2012 cost of basket = (4*150) + (20*1.5) = $630

2017 cost of basket = (4*175) + (20*2) = $740

Correct option: (A)

30.

CPI 2012 = 100 (always 100 for base year)

CPI 2017 = (740/630)*100 = 117.46

Correct option: (A)

31.

Inflation = (117.46-100)/100 = 17.46%

Correct option: (D)

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