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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 20102010 and in 20152015. Show your work. (b) Use 20102010 as the base year to calculate the price indices for 20102010 and 20152015 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 20102010 and 20152015, what percentage change in nominal income would be needed? Explain.

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 20102010 and in 20152015. Show your work. (b) Use 20102010 as the base year to calculate the price indices for 20102010 and 20152015 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 20102010 and 20152015, what percentage change in nominal income would be needed? Explain.

Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter3: Your Role As A Consumer
Section3.3: Consumerism
Problem 5R
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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 20102010 and in 20152015. Show your work.

(b) Use 20102010 as the base year to calculate the price indices for 20102010 and 20152015 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 20102010 and 20152015, what percentage change in nominal income would be needed? Explain.

Product Mocha coffee Sweet pudding Cassava leaf salad Market Basket of Goods 100 cups 50 quarts 25 packages 2010 $2.00 per cup $1.50 per quart $1.00 per package Prices 2015 $2.50 per cup $2.20 per quart $1.20 per package
Transcribed Image Text:Product Mocha coffee Sweet pudding Cassava leaf salad Market Basket of Goods 100 cups 50 quarts 25 packages 2010 $2.00 per cup $1.50 per quart $1.00 per package Prices 2015 $2.50 per cup $2.20 per quart $1.20 per package
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