Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 23, Problem 8SPPA
To determine
To find:
The effect on
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The table shows the quantities of the goods Suzie
bought and the prices she paid during two consecutive
weeks.
Suzie's CPI market basket contains the goods she
bought in Week 1.
Calculate the cost of Suzie's CPI market basket in Week
1 and in Week 2.
What percentage of the CPI market basket is gasoline?
Calculate the value of Suzie's CPI in Week 2 and her
inflation rate in week 2.
The cost of her CPI market basket in Week 2 is $ 95.75.
>>> Answer to 2 decimal places.
Gasoline is 36.3 percent of the CPI market basket.
>>> Answer to 1 decimal place.
Week 1
Item
The cost of Suzie's CPI market basket in Week 1 is $ 103.25.
>>> Answer to 2 decimal places.
The value of Suzie's CPI in Week 2 is
>>> Answer to 1 decimal place.
Coffee
Books
Gasoline
Week 2
Item
Coffee
Books
Gasoline
Concert
Quantity
13 cups
1
15 gallons
Quantity
13 cups
2
5 gallons
1 ticket
Price
$2.75 a cup
$30.00 each
$2.50 a gallon
Price
$2.75 a cup
$15.00 each
$3.00 a gallon
$95 each
The table shows the quantities of the goods Suzie bought and the prices she paid during
two consecutive weeks.
Suzie's CPI market basket contains the goods she bought in Week 1.
Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2.
What percentage of the CPI market basket is gasoline?
Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2.
The cost of Suzie's CPI market basket in Week 1 is $
>>> Answer to 2 decimal places.
m
Week 1
Item
Coffee
Books
Gasoline
Week 2
Item
Coffee
Books
Gasoline
Concert
Quantity
8 cups
1
25 gallons
Quantity
8 cups
4
15 gallons
1 ticket
Price
$4.00 a cup
$25.00 each
$2.00 a gallon
Price
$4.00 a cup
$12.50 each
$2.50 a gallon
$95 each
The "pizza connection" refers to the observation that in a major city, the cost of a slice of pizza is always about the same as the subway fare. Using the CPI values from the table
shown below and the CPI table, determine what a slice of pizza should have cost in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI. What does this tell you about how
actual pizza prices changed compared to the CPI?
1984 1993 1997
2002
Year
Pizza Cost
2008 2011 2015
2.50 2.75 2.80
1.00
1.25
1.50
2.00
1.00
1.15
2.00
2.60 2.85
3.05
Subway fare
CPI
1.40
144.5 160.5 179.9 215.3 224.9
103.9
237.0
Click to view the CPI Table.
A slice of pizza should have cost $ in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI.
(Round to the nearest cent as needed.)
Data table
C
Year
1976 56.9
1977 60.6
1978 65.2
1979 72.6
1980 82.4
1981 90.9
1982 96.5
1983 99.6
1984 103.9
1985 107.6
Average Annual Consumer Price Index (1982-1984=100)
CPI
CPI
Year
CPI
1996 156.9
Year
1986
109.6
1987 113.6
1988 118.3…
Chapter 23 Solutions
Foundations of Economics (8th Edition)
Ch. 23 - Prob. 1SPPACh. 23 - Prob. 2SPPACh. 23 - Prob. 3SPPACh. 23 - Prob. 4SPPACh. 23 - Prob. 5SPPACh. 23 - Prob. 6SPPACh. 23 - Prob. 7SPPACh. 23 - Prob. 8SPPACh. 23 - Prob. 9SPPACh. 23 - Prob. 10SPPA
Ch. 23 - Prob. 1IAPACh. 23 - Prob. 2IAPACh. 23 - Prob. 3IAPACh. 23 - Prob. 4IAPACh. 23 - Prob. 5IAPACh. 23 - Prob. 6IAPACh. 23 - Prob. 7IAPACh. 23 - Prob. 8IAPACh. 23 - Prob. 9IAPACh. 23 - Prob. 10IAPACh. 23 - Prob. 1MCQCh. 23 - Prob. 2MCQCh. 23 - Prob. 3MCQCh. 23 - Prob. 4MCQCh. 23 - Prob. 5MCQCh. 23 - Prob. 6MCQCh. 23 - Prob. 7MCQCh. 23 - Prob. 8MCQ
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- Consider the following basket of student essentials: 2019 2020 Burritos $6.30 $6.60 Pizzas $9.90 $10.00 Movie Tickets $10.00 $10.50 Energy Drinks $4.99 $5.99 a. Using 2019 as the base year, what is the CPI in 2019? b. Assume students buy 30 burritos, 25 pizzas, 15 movie tickets, and 200 energy drinks each year. What is the CPI in 2020 using 2019 as a base year? What is the inflation rate? Would this rate be higher or lower if students bought more energy drinks?arrow_forwardCovid 19 pandemic has forced the people in the economy Love & Laughter, to consume only 2 goods, food, and clothing. The CPI is derived from the market basket of goods which consists of 25 units of food and 5 units of clothing. FOOD Clothing 2018 price per unit $8 $20 2019 price per unit $12 $40 1. What are the percentage increases in the price of food and in the price of clothing? 2. What is the percentage increase in the CPI? 3. Do these price changes affect all consumers to the same extent? Explain.arrow_forwardIn a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explainarrow_forward
- Additional Problem 4 The tables show the quantities of the goods that Harry bought and the prices he paid during two consecutive weeks. Week 1 Harry's CPI market basket contains the goods he bought in Week 1. Item Quantity Price (per unit) Calculate Harry's CPI in Week 2. What was his inflation rate in Week 2? Coffee 5 cups $3.00 iTunes songs $1.00 Harry's CPI in Week 2 is. >>> Answer to 1 decimal place. Gasoline 10 gallons $2.00 Week 2 Item Quantity Price (per unit) $3.25 Coffee 4 cups iTunes songs 10 $1.00 Gasoline 10 gallons $3.00 Enter your answer in the answer box and then click Check Answer. 1 part remaining Clear All Chec 20 DII DD esc F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 ! 23 & 1 2 3 4 6 7 Q W E T Y U tab A S D F G J K caps lock 00 %24arrow_forwardThe tables show the quantities of the goods that Harry bought and the prices he paid during two consecutive weeks. Harry's CPI market basket contains the goods he bought in Week 1. Calculate Harry's CPI in Week 2. What was his inflation rate in Week 2? Harry's CPI in Week 2 is >>> Answer to 1 decimal place. Week 1 Item Coffee iTunes songs Gasoline Week 2 Item Coffee iTunes songs Gasoline Quantity 5 cups 5 10 gallons Quantity 4 cups 10 10 gallons Price (per unit) $3.00 $1.00 $2.00 Price (per unit) $3.25 $1.00 $3.00arrow_forward7) In 2010, a bottle of Coke cost $1. In 2020, it would cost $1.50. The CPI for 2020 was 260 and the CPI for 2010 was 220. Which of the following statements is correct? A) The real price of Coke stayed the same. B) The real price of Coke decreased. C) The real price of Coke increased. D) The nominal price of Coke stayed the same.arrow_forward
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