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Question 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good A Good B Good C Table 22.6 Units Purchased 2014 $1.00 $2.00 $4.00 5 10 4 Price per Unit in 2015 $1.50 $2.50 $4.50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?

Question 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good A Good B Good C Table 22.6 Units Purchased 2014 $1.00 $2.00 $4.00 5 10 4 Price per Unit in 2015 $1.50 $2.50 $4.50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?

ENGR.ECONOMIC ANALYSIS
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 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good Good B Good C Units Purchased 5 10 4 Table 22.6 2014 $1.00 $2.00 $4.00 Price per Unit in 2015 $1.50 $2.50 $4.50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?
Transcribed Image Text:Question 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good Good B Good C Units Purchased 5 10 4 Table 22.6 2014 $1.00 $2.00 $4.00 Price per Unit in 2015 $1.50 $2.50 $4.50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?
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