Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Prices Market Product Basket of 2010 2015 Goods Mocha $2.00 per $2.50 per 100 cups coffee cup cup Sweet $1.50 per $2.20 per 50 quarts pudding quart quart $1.00 per package $1.20 per package Cassava 25 packages leaf salad The nation of Kona cultivates coffee beans and cassava, from which all their consumer goods are produced. (a) Calculate the cost of the market basket of goods in the table in 2010 and in 2015. Show your work. (b) Use 2010 as the base year to calculate the price indices for 2010 and 2015 for the market basket of goods in the table. Show your work. (c) In order for a citizen of Kona to maintain the same standard of living between 2010 and 2015, what percentage change in nominal income would be needed? Explain.
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Prices Market Product Basket of 2010 2015 Goods Mocha $2.00 per $2.50 per 100 cups coffee cup cup Sweet $1.50 per $2.20 per 50 quarts pudding quart quart $1.00 per package $1.20 per package Cassava 25 packages leaf salad The nation of Kona cultivates coffee beans and cassava, from which all their consumer goods are produced. (a) Calculate the cost of the market basket of goods in the table in 2010 and in 2015. Show your work. (b) Use 2010 as the base year to calculate the price indices for 2010 and 2015 for the market basket of goods in the table. Show your work. (c) In order for a citizen of Kona to maintain the same standard of living between 2010 and 2015, what percentage change in nominal income would be needed? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Kindly answer the three subparts please.
Transcribed Image Text:Include correctly labeled diagrams, if useful or required, in explaining your answers.
A correctly labeled diagram must have all axes and curves clearly labeled and must
show directional changes. If the question prompts you to "Calculate," you must
show how you arrived at your final answer.
Prices
Market
Product
Basket of
2010
2015
Goods
Mocha
$2.00 per
$2.50 per
100 cups
coffee
cup
cup
Sweet
$1.50 per
$2.20 per
50 quarts
pudding
quart
quart
$1.00 per
package
$1.20 per
package
Cassava
25 packages
leaf salad
The nation of Kona cultivates coffee beans and cassava, from which all their
consumer goods are produced.
(a) Calculate the cost of the market basket of goods in the table in 2010 and in
2015. Show your work.
(b) Use 2010 as the base year to calculate the price indices for 2010 and 2015 for
the market basket of goods in the table. Show your work.
(c) In order for a citizen of Kona to maintain the same standard of living between
2010 and 2015, what percentage change in nominal income would be needed?
Explain.
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