Homework Answers
The fixed basket contains 4 hamburgers and 8 hot dogs.
Calculate the value of fixed basket in 2009 -
Value = [Number of hamburgers * price of hamburgers in 2009] + [Number of hot dogs * Price of hotdogs in 2009]
Value = [4 * $5] + [8 * $3]
Value = $20 + $24
Value = $44
The value of fixed basket in 2009 was $44.
Calculate the value of fixed basket in 2010 -
Value = [Number of hamburgers * price of hamburgers in 2010] + [Number of hot dogs * Price of hotdogs in 2010]
Value = [4 * $5.50] + [8 * $3.30]
Value = $22 + $26.4
Value = $48.4
The value of fixed basket in 2010 was $48.4.
Calculate the value of fixed basket in 2011 -
Value = [Number of hamburgers * price of hamburgers in 2011] + [Number of hot dogs * Price of hotdogs in 2011]
Value = [4 * $5.61] + [8 * $3.63]
Value = $22.44 + $29.04
Value = $51.48
The value of fixed basket in 2011 was $51.48.
The base year is 2009.
CPI in base year is always 100.
So, the CPI in 2009 was 100.
Calculate the CPI in 2010 -
CPI = [Value of fixed basket in 2010/Value of fixed basket in 2009] * 100
CPI = [$48.4/$44] * 100
CPI = 110
The CPI in 2010 was 110.
Calculate the CPI in 2011 -
CPI = [Value of fixed basket in 2011/Value of fixed basket in 2009] * 100
CPI = [$51.48/$44] * 100
CPI = 117
The CPI in 2011 was 117.
Calculate the inflation rate in 2010 -
Inflation rate = [(CPI in 2010 - CPI in 2009)/CPI in 2009] * 100
Inflation rate = [(110 - 100)/100] * 100 = 10%
The inflation rate in 2010 was 10%.
Calculate the inflation rate in 2011 -
Inflation rate = [(CPI in 2011 - CPI in 2010)/CPI in 2010] * 100
Inflation rate = [(117 - 110)/110] * 100 = 10%
The inflation rate in 2011 was 6.36%.
Hence, the correct answer is the option (a).
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5. In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 19 hot dogs and 8 hamburgers. A hot dog cost $2.25 in 2006 and 3.70 in 2007. A hamburger cost $5.75 in 2006 and $7.86 in 2007. Calculate the CPI for both years and then find the inflation rate. 6. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 25 sandwiches and 40 magazines. In 2006, a...
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Attempts Score 33 Chapter mamebst, Section 96, Problem 077 Table 24-2 The table below pertains to lowan, an economy in which the tvpical consumer's basket consists of 3 pounds of pork and 4 bushels of corm. Price of Pork Year Price of Com 2008 $20 per pound $12 per bushel 2009 $25 per pound $18 per bushel Refer to Table 24-2 11 2008 is the base year, then the inflation rate in 2009 was e Save & Canta Continuewithout savng
The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 12 bushels of apples and 7 bushels of almond. Year Price of Apples Price of Almond (Dollars per bushel) (Dollars per bushel) 14 4 7 13 Year 1 Year 2 Refer to Table 24-1. The cost of the basket in Year 1 was O a. $97. b. $196. C. $28. d. $259.
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