a) In 2015 (the base year), the representative consumer bought 20 cinema tickets at $12 each, and 1 laptop computer at a price of $500. In 2016, the price of cinema tickets rose to $15 each and the price of a laptop rose to $550. Calculate the inflation rate between 2015 and 2016. b) List the three types of biases of the consumer price index (CPI). If using the price index presented above, provide examples for how each of these three biases woulc apply to the measured level of inflation for the year 2020 (no calculations necessary).

a) In 2015 (the base year), the representative consumer bought 20 cinema tickets at $12 each, and 1 laptop computer at a price of $500. In 2016, the price of cinema tickets rose to $15 each and the price of a laptop rose to $550. Calculate the inflation rate between 2015 and 2016. b) List the three types of biases of the consumer price index (CPI). If using the price index presented above, provide examples for how each of these three biases woulc apply to the measured level of inflation for the year 2020 (no calculations necessary).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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