Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980. 1980 1990 2000 2010 CPI Retail price of butter 100.00 158.56 208.98 218.06 2.95 2.18 2.03 2.39 Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.) 1980 1990 2000 2010 Real price of butter 2.18 1.28 1.14 1.35 Between 1980 and 2000, the real price of butter has decreased What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by 47.71 %. (Enter your response rounded to two decimal places.) Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) 1980 2000 2010 Real price of butter 1990 CPI 63.07 100 131.80 137.53 Next, determine the real price of butter in 1990 dollars in the table above.

Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980. 1980 1990 2000 2010 CPI Retail price of butter 100.00 158.56 208.98 218.06 2.95 2.18 2.03 2.39 Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.) 1980 1990 2000 2010 Real price of butter 2.18 1.28 1.14 1.35 Between 1980 and 2000, the real price of butter has decreased What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by 47.71 %. (Enter your response rounded to two decimal places.) Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) 1980 2000 2010 Real price of butter 1990 CPI 63.07 100 131.80 137.53 Next, determine the real price of butter in 1990 dollars in the table above.

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

Just cannot figure out how to calculate real price.

Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980.
1980
1990
2000
2010
CPI
Retail price of butter
100.00
158.56
208.98
218.06
2.18
2.03
2.39
2.95
...
Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.)
1980
1990
2000
2010
Real price of butter
2.18
1.28
1.14
1.35
Between 1980 and 2000, the real price of butter has decreased
What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000?
The real price of butter has decreased by 47.71 %. (Enter your response rounded to two decimal places.)
Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars.
To do this, first convert the CPl into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.)
1990
2000
2010 Real price of butter
1980
CPI
63.07
100
131.80
137.53
Next, determine the real price of butter in 1990 dollars in the table above.

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