Could you please help me with this question? Thank you! Question 4Refer to the information provided in Table 22.6 below to answer the question(s) that follow.GoodGood BGood CUnits Purchased5104Table 22.62014$1.00$2.00$4.00Price per Unit in2015$1.50$2.50$4.502016$1.50$3.00$5.00a) 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 youknow? 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 and2015? Show your calculation/d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and2016? Show your calculations.e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table22.6)? Why is this a good definition for aggregating overall price levels? What is one criticismof the selection of the market basket?

The bundle price, or the cost of a basket of goods refers to the volume of money spent by an average consumer over some selected prices of goods. It refers to a predetermined assortment of consumer goods or services whose prices are taken into account for calculating an economy's inflation rate. Governments can monitor inflation by routinely evaluating the basket's price and contents. The rate of price growth over a set time period is known as inflation. Sometimes the amount of inflation is expressed in general terms, such as the overall rise in prices or the rise in the cost of living nationwide. The Consumer Price Index measures shifts in consumer spending on products and services (CPI). The CPI is a gauge of how much money is spent by each of two demographic categories.a) The bundle price in 2014 = Amount spent on Good A + Amount spent on Good B+Amount spent on Good C =Units purchased of A×Price of A + Units purchased of B×Price of B + Units purchased of C×Price of C =$5×1.00 + 10×2.00 +4×4.00 =$41Thus, the price of bundle in 2014 is $41b) To proceed further, the bundle price has to be calculated for 2015 and 2016 as well.The bundle price in 2015 = Amount spent on Good A + Amount spent on Good B+Amount spent on Good C =Units purchased of A×Price of A + Units purchased of B×Price of B + Units purchased of C×Price of C =$5×1.50 + 10×2.50 +4×4.50 =$50.5and bundle price in 2016 =$5×1.50 + 10×3.00 +4×5,00 =$57.5 Now, that the bundle prices for 2014, 2015 and 2016 has been estimated, the consumer price index CPI based on 2014 prices can be calculated as follows:CPI for 2014 =Bundle Price in 2014Bundle price in base year 2014×100 =$41$41×100 =100CPI for 2015 =Bundle Price in 2015Bundle price in base year 2014×100 =$50.5$41×100 =123.71Thus, the price index in 2014 based on 2014 prices is 100 andthe price index in 2015 based on 2014 prices is 123.71c) Inflation rate is calculated as a percentage change in the price index of two succesive years.Thus, inflation rate from 2014 to 2015 =Price index in 2015-Price index in 2014Price index in 2014 × 100% =123.71-100100 × 100% =23.71%Hence, the inflation rate from 2014 to 2015 is 23.71%d) Now the base year has been changed to 2015. This calls for making modifications to the price index and subsequently the inflation rates.Now, CPI for 2014 based on 2015 prices =Bundle Price in 2014Bundle price in base year 2015×100 = $41$50.5×100 =81.19CPI for 2015 based on 2015 prices =Bundle Price in 2015Bundle price in base year 2015×100 = $50.5$50.5×100 =100and CPI for 2016 based on 2015 prices =Bundle Price in 2016Bundle price in base year 2015×100 = $57.5$50.5×100 =113.86 Now, the inflation rate from 2015 to 2016 based on 2015 prices=CPI for 2016 based on 2015 prices-CPI for 2015 based on 2015 pricesCPI for 2015 based on 2015 prices×100% =113.86-100100×100% =13.86%Thus, the inflation rate from 2015 to 2016 based on 2015 prices is 13.86% e) The market basket of goods has been defined in terms of consumer price index, which serves as a gauge for an economy's overall price level. The CPI is a measure which calculates the degree of variation in the market basket's current prices between the given period and some base period. A monthly or quarterly calculation of the CPI is typical. It is based on the typical spending habits of city dwellers, who range in age from children to seniors. The CPI is a good measure to gauge a nation's rate of inflation and cost of living. In order to determine the rate of inflation, it becomes possible to compare both the prices and price trends of various quarters, months, or years. The comparison of relevant facts from one month this year to the same month last year, or from two consecutive months, and so forth, becomes simple for economists. They might decide to focus on a particular category to see whether the price has decreased or increased. One disadvantage of the CPI is that it does not account for the variations in spending habits among households. Every household is unique, therefore some may spend significantly more money than others on particular items. Thus, the variation in the market basket's current prices between a base period and a given period is calculated using the consumer price index. The CPI is a reliable indicator of an economy's inflation and cost of living. It becomes possible to compare the prices and price patterns of several quarters, months, or years in order to calculate the rate of inflation. The CPI has the drawback of not taking into account the differences in spending patterns amongst families. Thus, a) The price of bundle in 2014 is $41 b) The price index in 2014 based on 2014 prices is 100 and the price index in 2015 based on 2014 prices is 123.71 c) The inflation rate from 2014 to 2015 is 23.71% d) The inflation rate from 2015 to 2016 based on 2015 prices is 13.86% e) The consumer price index is used to compute the difference in the market basket's current prices between a base period and a given period. The CPI is a trustworthy measure of inflation and cost of living in an economy. To determine the rate of inflation, it becomes possible to analyse the prices and price trends across numerous quarters, months, or years. But, the CPI has the issue of not accounting for the variations in spending habits between families.