1. Calculating inflation using a simple price indexConsider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute.The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022.The cost of each good in the basket as well as the basket's total cost are given for 2020.Perform these same calculations for 2021 and 2022, and enter the results in the following table.Streaming servicesIced coffeesTextbooksNotebooksEnergy drinksTotal costPrice indexQuantity in Basket115010840Price(Dollars)642Suppose this price index uses 2020 as the base year.20208023Cost(Dollars)64300800161201,300100Price(Dollars)10428522021Cost(Dollars)In the last row of the table, calculate and enter the value of the UPI for the remaining years.Between 2020 and 2021, the UPI Increased by104300850161601,430110)Between 2021 and 2022, the UPI Increased byPrice(Dollars)134210552022Cost(Dollars)1343001,050322001,716132Which of the following, if true, would Illustrate why price indexes such as the UPI might overstate inflation in the cost of going to college? Check allthat applyAn app-based scooter company, which made it easier to get around places like college campuses, became available for rental.As the price of energy drinks increased relative to the price of coffee between 2020 and 2022, students decreased their consumption ofenergy drinks and increased their consumption of coffee.Professors required each student to buy eight notebooks, regardless of the price.The quality of textbooks increased dramatically from 2020 to 2022, with textbook companies bundling new online study aids with theirbooks, but this quality change is hard to measure.

The price index measures the change in price paid by consumers for a particular basket of…

1. Calculating inflation using a simple price index Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute. The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022. The cost of each good in the basket as well as the basket's total cost are given for 2020. Perform these same calculations for 2021 and 2022, and enter the results in the following table. 2020 Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Price Cost Quantity in Basket (Dollars) (Dollars) 1 150 10 8 40 3N8Nm 64 2 80 300 800 16 120 1,300 100 2021 Cost Price (Dollars) (Dollars) 104 2 85 2 104 300 850 16 160 1,430 110 Price (Dollars) 134 2 105 5 2022 Cost (Dollars) 134 300 1,050 200 1,716 132

1. Calculating inflation using a simple price index Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute. The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022. The cost of each good in the basket as well as the basket's total cost are given for 2020. Perform these same calculations for 2021 and 2022, and enter the results in the following table. 2020 Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Price Cost Quantity in Basket (Dollars) (Dollars) 1 150 10 8 40 3N8Nm 64 2 80 300 800 16 120 1,300 100 2021 Cost Price (Dollars) (Dollars) 104 2 85 2 104 300 850 16 160 1,430 110 Price (Dollars) 134 2 105 5 2022 Cost (Dollars) 134 300 1,050 200 1,716 132

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

I only need help with part (C)
Britney is a baseball fan and attends several games per season. Her expenses per season are listed in the table below: Year 2 Year 1 5 Baseball $500$560 Tickets Jersey $120 $150 $150 $160 Food Transport $60 S$70 Assuming that year 1 is the base year, calculate the price index for year 1 and for year 2. 100, 113 100, 88 88, 113 88, 100
"Shoeless" Joe Jackson was offered $ 5,000 by the infamous gambler Arnold Rothstein to "throw" the 1919 World Series. What is the purchasing power of Rothstein's bribe in 2021? A) $ 9,342.55 B) $ 75,780.35 C) $ 349,439.25 D) $ 892,445.05
The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices Year 2008 2009 2010 2011 2012 2013 Annual Inflation Rate (percent) 3.78% -0.39 1.6 3.09 2.02 1.42 Annual Nominal Wage Growth (percent) 0.31% -1.1 -0.69 1.27 2.46 2.07 Annual Real Wage Growth (percent) b. Of the years listed above, the paycheck of the average worker declined in c. Of the years listed above, the purchasing power of the average worker declined in of the six years. d. The average real income of households can increase whether the nominal wage increases or decreases of the six years.
4. Good X Y Z Quantity 10 20 5 Price in 1999 $5 $10 $6 Price in 2000 $6 $10 $10 Assume year 2000 is the base year. a) Calculate the market basket value for each year. What is the consumer price index in 1999? b) What is the inflation rate between 1999 and 2000?
In 2020 and in 2021, consumers in Dexter consumed only books and pens. The prices and quantities for 2020 and 2021 are listed in the table. The reference base period for Dexter's CPI is 2020, and 2020 is also the year of the Consumer Expenditure Survey. Calculate the inflation rate in 2021. The inflation rate in 2021 is A. 121.7 B. 73.0 C. 21.7 D. 4.6 percent. ID Item Books Pens 2020 2021 Price Quantity Price Quantity 10 $5 7 $4 $5 5 8 $9
Refer to the following table. Suppose the CPI basket consists of 10 pies of pizza and 20 bottles of milk respectively, and 2020 is the base year. Year Price of pizza Price of milk 2020 $250 $40 2021 $280 $45 а. Calculate the CPI in 2020 and 2021 respectively. What is the inflation rate in 2021? b. Suppose the minimum wage is $37.5 per hour in 2020, how much would it be in 2021 in order to maintain the same purchasing power in 2020?. С. Which one do you think is a better measure of a household's cost of living, CPI or GDP deflator? Why?*
A) Inflation is the steady and widespread increase in prices. The inflation rate, measured by CPI, rose .1% in May (since April) and rose a total of 4% year-over-year (May 2022 to May 2023). Read the BLS report on the Consumer Price Index and identify an “item” or “all items” and begin to consider why the price increased. Do a news search or using (clear, logical, rational) reasoning explain whether prices are increasing because demand increased or because supply decreased. Graph and explain your answer
Consider a simple economy that only produces: pencils, t-shirts, and bananas. Using the information in the table below, calculate the inflation rate for 2020, as measured by the consumer price index. Product Pencils T-shirts Bananas 1.9% 1.1% O-1.1% 1.5% O-1.9% Quantity 8 15 5 Base year price (2010) $2 $5 $1 Price (2019) $3 $7 $1.50 Price (2020) $3.50 $6.75 $1.75
In detail, explain what is happening in this graph for Inflation rate based on CPI