Answer 2 questions using the table below: In a random country people consume 3 o
ID: 1130480 • Letter: A
Question
Answer 2 questions using the table below:
In a random country people consume 3 only goods: ice-cream, pizza and soda.
Ice Cream
Pizza
Soda
2015 price
$2
$4
$1
2015 quantity
100
100
200
2016 price
$2
$6
$2
2016 quantity
100
100
200
Using the same method as the consumer price index, create and index then compute percent change in the overall price level.
If you were to learn that a bottle of soda increased in size from 2015 to 2016, should that information affect the calculation of the inflation rate? Is this estimation going to be lower or higher? Explain your answer. (the word lower OR higher, must be part of your answer).
Ice Cream
Pizza
Soda
2015 price
$2
$4
$1
2015 quantity
100
100
200
2016 price
$2
$6
$2
2016 quantity
100
100
200
Explanation / Answer
P15 Q15 P16 Q16 P15*Q16 P16*Q16 Ice Cream 2 100 2 100 200 200 Pizza 4 100 6 100 400 600 Soda 1 200 2 200 200 400 800 1200 Inflation = P16*Q16/P15*Q16 Inflation = (1200/800)*100 Inflation = 9.75% *Yes this will increase the consumption. This will lower the estimation of inflation.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.