Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 6.A, Problem 4TY
To determine
To compute:
The
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Examine the following information as reported for the foods below in the years 2010
and 2019.
2010
2019
Item
Price (S)
Quantity
Price (S)
Quantity
Eggs (one dozen)
$2.75
27
$3.37
40
Chicken (500 g)
$3.20
11
$3.57
7
Bread (675 g)
$2.28
18
$2.83
23
a) Compute a simple price index for each of the items, using the year 2010 as the
base year. Enter them in the same order as above: Eggs, Chicken, Bread. Round
answers to 1 decimal.
b) Compute a simple aggregate price index. Use 2010 as the base period. Round to
one decimal place.
c) Compute the Laspeyres price index for 2019 using 2010 as the base year. Round
to one decimal place.
d) Determine a value index for 2019, using 2010 as the base year. Round to one
decimal place.
You can use a price index to study the buying habits of individuals? True or false
16
Chapter 6 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
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- Given the data in the above table, what is the price index for 1991, using 1988 as the base year and using the 1988 consumption pattern (market basket)?arrow_forwardThe Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for $7,500 in 1999? Year CPI 1960 29.6 1973 1986 44.4 109.6 156.9 1999 2012 229.6 In 2012, a car would sell for approximately $ 58,176 (Round to the nearest dollar.)arrow_forwardThe Consumer Price Index isarrow_forward
- Market Commodity Basket Milk Eggs Bread Quantity 10 gallons 10 dozen 10 loaves 2010 2011 Price price per per Unit unit $2.00 $2.50 $2.00 $3.00 $2.00 $3.00 Use the Table above to answer the following questions. (Where applicable, round your answers to two decimal places) a) If 2010 is the base year in the table shown above, the price index for the year 2010 is b) If 2010 is the base year in the table shown above, the price index for the year 2011 c) Considering the data in the table shown above and 2010 as the base year, the inflation rate in 2011 is %arrow_forwardYou are employed by the state bureau of economic development. There is a demand for a leading economic index to review past economic activity and to forecast future economic trends in the state. You decide that several key factors should be included in the index: number of new businesses started during the year, number of business failures, state income tax receipts, college enrollment, and the state sales tax receipts. Here are the data for 2000 and 2018. 2000 2018 New businesses 1,240 1,325 Business failures 600 496 State income tax receipts ($ millions) 185.2 220.8 College student enrollment 242,299 291,291 State sales tax ($ millions) 55.1 57.4 The weights you assign are: new businesses 15%, business failures 10%, income tax 42%, enrollment 13% and sales tax 20%. b. Compute the leading economic indicator for 2018. (Round your answer to 2 decimal places.) c. Interpret the indexes. (Round your answer to 2 decimal places.) Economic activity has (increased or decreased) _____%…arrow_forwardHow can I find the Consumer Price Indexarrow_forward
- Discuss the Price Index most commonly used in your country. How is it calculated?arrow_forwardSuppose that the index of wholesale-to-retail beef price index for 2018 was 1.35 and the base year of this index was 2006. Relative to 2006, beef prices in 2018 were higher(lower) and by how much?arrow_forwardWhat are the differences between the Consumer Price Index and the Producer Price Index?arrow_forward
- Using 2016 as the base year, calculate the Laspeyre’s Price Index for 2021. A 135.60B 66.73C 138.44D 149.86arrow_forwardSuppose that before the end of the year a typical consumer purchased 125 apples, 60 bananas, and 85 oranges. Year 1 Year 2 Price of apple Price of banana 0.75 $ 0.90 0.20 0.45 Price of orange 24 0.25 $ 0.60 What is the price index for year 2, using year 1 as the base year (round to the nearest full number)?arrow_forwardThe price index for 2004, based in 2002, using the 2000 market basked is ____.arrow_forward
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