Table 8P-4 lists the prices and quantities consumed of three different goods from 2014-2016. [LO 8.2] a. For 20142015, and 2016, determine the amount 4, 20 that a typical consumer pays each year to pur chase the quantities listed in the table. b. Using the amounts you found in part a, calculate the percentage change in the amount the con sumer paid from 2014 14 to 2015 , and from 2015 to 2016. c. Why is it problematic to use your answers to part b as a measure of inflation ? d. Suppose we take 2014 as the base year, which implies that the market basket is fixed at the 2014 consumption levels. Using 2014 consump tion levels, now find the rate of inflation from 2014 to 2015 and from 2015 to 2016. (Hint : First calculate the cost of the 2014 market basket using each year's prices and then find the per centage change in the cost of the basket. ) e. Repeat the exercise from part d, now assuming that the base year is 2015. f. Why were your answers from parts d and e different?

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Table 8P-4 lists the prices and quantities consumed of three different goods from 2014-2016. [LO 8.2] a. For 20142015, and 2016, determine the amount 4, 20 that a typical consumer pays each year to pur chase the quantities listed in the table. b. Using the amounts you found in part a, calculate the percentage change in the amount the con sumer paid from 2014 14 to 2015 , and from 2015 to 2016. c. Why is it problematic to use your answers to part b as a measure of inflation ? d. Suppose we take 2014 as the base year, which implies that the market basket is fixed at the 2014 consumption levels. Using 2014 consump tion levels, now find the rate of inflation from 2014 to 2015 and from 2015 to 2016. (Hint : First calculate the cost of the 2014 market basket using each year's prices and then find the per centage change in the cost of the basket. )

e. Repeat the exercise from part d, now assuming that the base year is 2015. f. Why were your answers from parts d and e different?

in each time frame relative tő
base
year,
2012-2016
TABLE 8P-4
2014
2015
2016
Good
Price ($)
Quantity
Price ($)
Quantity
Price ($)
Quantity
A
10
10
15
20
B
18
4.
25
1
10
10
T國A
OCT
étv
11
3D
MacBook Air
DII
吕0
888
F10
F9
F8
F6
F7
F4
F5
esc
F2
F3
F1
&
#
!
4
5
7
1
2
3
T
Y
Q
W
E
tab
H.
K
G
A
cans lock
5.
* 00
30
F I
%24
C.
Transcribed Image Text:in each time frame relative tő base year, 2012-2016 TABLE 8P-4 2014 2015 2016 Good Price ($) Quantity Price ($) Quantity Price ($) Quantity A 10 10 15 20 B 18 4. 25 1 10 10 T國A OCT étv 11 3D MacBook Air DII 吕0 888 F10 F9 F8 F6 F7 F4 F5 esc F2 F3 F1 & # ! 4 5 7 1 2 3 T Y Q W E tab H. K G A cans lock 5. * 00 30 F I %24 C.
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