Covid 19 pandemic has forced the people in the economy Love & Laughter, to consume only 2 goods, food, and clothing. The CPI is derived from the market basket of goods which consists of 25 units of food and 5 units of clothing. FOODClothing2018 price per unit$8$202019 price per unit$12$40 1. What are the percentage increases in the price of food and in the price of clothing?2. What is the percentage increase in the CPI?3. Do these price changes affect all consumers to the same extent? Explain.

The Consumer Price Index measures the change in prices that are incurred by consumers for goods and…

Answered: Covid 19 pandemic has forced the people…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Covid 19 pandemic has forced the people in the economy Love & Laughter, to consume only 2 goods, food, and clothing. The CPI is derived from the market basket of goods which consists of 25 units of food and 5 units of clothing.

	FOOD	Clothing
2018 price per unit	$8	$20
2019 price per unit	$12	$40

1. What are the percentage increases in the price of food and in the price of clothing?

2. What is the percentage increase in the CPI?

3. Do these price changes affect all consumers to the same extent? Explain.

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