The residents of Freedonia currently are consuming seven goods; yogurt, green tea, tofu, bean sprouts,cookie dough ice cream, Tito's Handmade Vodka and housing. The prices and quantities for these goodsare given in the following table.GoodYogurtGreen TeaTofuBean SproutsCookie DoughQuantity3718Ice CreamTito's Handmade IVodkaHousing20182Price2.400.601.201.003.5022.10500.00Quantity492047I20192Price2.860.724.801.204.0021.35505.00Quantity6102268220202a.Suppose that 2019 is the base year. Calculate the price index for 2018, 2019 and 2020.b. Determine the rate of inflation for 2019. Determine the rate of inflation for 2020.Price3.010.805.101.254.6025.50512.00

The price index is one of the measures to determine the changes in the prices of goods and services.…

Answered: a. Suppose that 2019 is the base year.…

a. Suppose that 2019 is the base year. Calculate the price index for 2018, 2019 and 2020. b. Determine the rate of inflation for 2019. Determine the rate of inflation for 2020.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

The residents of Freedonia currently are consuming seven goods; yogurt, green tea, tofu, bean sprouts,
cookie dough ice cream, Tito's Handmade Vodka and housing. The prices and quantities for these goods
are given in the following table.
Good
Yogurt
Green Tea
Tofu
Bean Sprouts
Cookie Dough
Quantity
3
7
18
Ice Cream
Tito's Handmade I
Vodka
Housing
2018
2
Price
2.40
0.60
1.20
1.00
3.50
22.10
500.00
Quantity
4
9
20
4
7
I
2019
2
Price
2.86
0.72
4.80
1.20
4.00
21.35
505.00
Quantity
6
10
22
6
8
2
2020
2
a.
Suppose that 2019 is the base year. Calculate the price index for 2018, 2019 and 2020.
b. Determine the rate of inflation for 2019. Determine the rate of inflation for 2020.
Price
3.01
0.80
5.10
1.25
4.60
25.50
512.00

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