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Subpart (a):
Measuring percentage change in price, CPI and Inflation rate.
Subpart (a):
![Check Mark](/static/check-mark.png)
Explanation of Solution
The percentage change in price of the good is calculated by using the following formula:
Substitute respective values in equation (1) to calculate the percentage price change for the tennis ball.
The percentage change in price for Tennis ball is 0.
Substitute respective values in equation (1) to calculate the percentage price change for the golf ball.
The percentage change in price for golf ball is 0.
Substitute respective values in equation (1) to calculate the percentage price change for the galorade.
The percentage change in price of golf balls is 50%.
The percentage change in price of bottle of gatorade is 100%.
Concept Introduction:
Consumer Price index (CPI): It is a measure that examines the changes in price levels of a basket of consumer goods and services which includes food and energy prices.
Inflation rate: It is a measure of the percentage change in the price index from the preceding period.
Subpart (b):
Measuring percentage change in price, CPI and Inflation rate.
Subpart (b):
![Check Mark](/static/check-mark.png)
Explanation of Solution
Thebase year is 2017. The consumer price index (CPI) can be calculated by using the following formula.
Substitute the respective values in equation (1) to calculate the CPI for the year 2017.
CPI in the year 2017 is 100.
Substitute the respective values in equation (1) to calculate the CPI for the year 2018.
CPI in the year 2018 is 150.
The overall change in price using CPI is calculated as follows:
Thus, the overall change in price is 50%.
Concept Introduction:
Consumer Price index (CPI): It is a measure that examines the changes in price levels of a basket of consumer goods and services which includes food and energy prices.
Inflation rate: It is a measure of the percentage change in the price index from the preceding period.
Subpart (c):
Measuring percentage change in price, CPI and Inflation rate.
Subpart (c):
![Check Mark](/static/check-mark.png)
Explanation of Solution
When the bottle of Gatorade increased in size from 2017 to2018, its value would be greater than before. As a result, this would lower the estimation of inflation rate.
Concept Introduction:
Consumer Price index (CPI): It is a measure that examines the changes in price levels of a basket of consumer goods and services which includes food and energy prices.
Inflation rate: It is a measure of the percentage change in the price index from the preceding period.
Subpart (d):
Measuring percentage change in price, CPI and Inflation rate.
Subpart (d):
![Check Mark](/static/check-mark.png)
Explanation of Solution
More flavors enhance consumers’ well-being which would result in change in quality and thus would lower the estimate of the inflation rate.
Concept Introduction:
Consumer Price index (CPI): It is a measure that examines the changes in price levels of a basket of consumer goods and services which includes food and energy prices.
Inflation rate: It is a measure of the percentage change in the price index from the preceding period.
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Chapter 24 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
- Firms would do which of the following actions according the Circular Flow diagram? Group of answer choices Sell, but does not buy. Sell and Buy (or Rent). Buys, but does not sell. Does not sell nor buys.arrow_forwardWhen the price of a good or a service increases, _______? Group of answer choices The demand curve shifts in the same direction. The supply curve shifts in the opposite direction. The demand curve shifts in the opposite direction. There is a movement along the demand curve.arrow_forwardA foreign country to which we export but from which we do not import would do ______ according the Circular Flow Diagram? Group of answer choices Sell and Buy (or Rent). Sell, but does not buy. Buys, but does not sell. Does not sell nor buys.arrow_forward
- Not use ai pleasearrow_forwardAfter the holiday season, many of us find ourselves thinking, “What will I do with another case for my iPad?” Often, both the gift giver and gift receiver could be made better off (that is, receive a higher level of utility or happiness) if cash had been given instead. To understand the economic rationale behind this, economists turn to the basic consumer theory model of budget constraints and indifference curves. Recall that an indifference curve maps out all possible consumption bundles of goods that yield the same level of utility to a given consumer. Indifference curves tell us nothing about what we can afford, but rather tell us how happy a particular bundle will make us. On the other hand, a budget constraint shows the consumption bundles that we can buy given our income and the prices of goods. Similarly, a budget constraint says nothing about what we would like to buy, but rather what we can afford. Suppose you consume only two types of goods: magazines and food. You have $300…arrow_forwardCho is a truck driver living in Miami who performs freelance health consulting to supplement her normal income. At an hourly wage rate of $45, she is willing to consult 5 hours per week. Upping the wage to $65 per hour, she is willing to consult 14 hours per week. Using the midpoint method, the elasticity of Cho’s labor supply between the wages of $45 and $65 per hour is approximately , which means that Cho’s supply of labor over this wage range is .arrow_forward
- Where do I draw the demand and supply linearrow_forwardIt would be inefficient but possible for this economy to produce? 100 1dryers 90 80 C 70 A 60 50 D B 40 30 20 10 10 20 30 40 50 60 70 80 washers O 90 dryers and 20 washers. 50 dryers and 50 washers. O Two of the answers are correct. O 60 dryers and 20 washers.arrow_forwardignore what i put and find the correct answerarrow_forward
- A foreign country to which we export but from which we do not import would _____ according the Circular Flow Diagram? • Sell and Buy (or Rent). • Does not sell nor buys. • Sell, but does not buy. • Buys, but does not sell.arrow_forwardFor a certain health insurance policy, losses are uniformly distributed on the interval [0, b].The policy has a deductible of $180 and the expected value of the non-reimbursed portionof a loss is $144. Calculate barrow_forwardfacebook (not Mark Zuckerberg) would do which action according the Circular Flow diagram? Buys, but does not sell. Does not sell nor buys. Sell, but does not buy. Sell and Buy (or Rent).arrow_forward
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
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