### Analysis of Consumer Expenditure Components and Their Impact on CPI#### Pie Chart DescriptionThe pie chart illustrates various components contributing to consumer expenditures as reported by the U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (2018 data). The distribution is as follows:- **Housing**: 32.8%- **Transportation**: 15.9%- **Food**: 12.9%- **Insurance and pensions**: 11.9%- **Miscellaneous**: 10.1%- **Health care**: 8.1%- **Entertainment**: 5.3%- **Clothing**: 3.0%Each segment of the pie chart reflects the percentage expenditure on the respective component.#### InstructionsPlease use the weights indicated in the pie chart to determine the percentage change in the Consumer Price Index (CPI) based on the scenarios provided:a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. Doubling of clothing prices.**Note:** Consult the table titled "Computing Changes in the CPI" in your textbook for further guidance.#### Calculation Table| Item | Item Weight | Price Change | Impact on CPI (Inflation Effect) ||---------------|-------------|--------------|----------------------------------|| a. Entertainment | 0.053 | 20% | || b. Transportation | 0.159 | -8% | || c. Clothing | 0.03 | 100% | |**Guidelines:** Enter your calculated impacts as percentages, rounded to two decimal places. Ensure any negative figures are preceded by a minus sign (−).

The cost difference between purchasing a bundle of goods and the base year is measured by the…

Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices. (Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.) Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers to include a negative sign (-) in front of those numbers. Item a. Entertainment Item Weight 0.053 Price Change 20% Impact on CPI (Inflation Effect)

Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices. (Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.) Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers to include a negative sign (-) in front of those numbers. Item a. Entertainment Item Weight 0.053 Price Change 20% Impact on CPI (Inflation Effect)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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