(1) Consumer Price Index (CPI) is a price indicator to reflect price levels over time. As a key economic indicator, CPI is computed monthly by the Bureau of Labor Statistics (BLS) using a “market basket" purchased by the typical consumer each month. Suppose you are doing a study to yearly price levels (CPI) of a metropolitan area in the US. Its CPI includes three categories, Food (grocery), Energy (gasoline) and other items (all goods and services less food and energy). The table below provides you the prices of the three categories in 2019, 2020 and 2021. Also, you have the units purchased by a typical consumer in these three categories. Use 2019 as the base year, to show step-by-step solutions for CPI in 2019, 2020 and 2021. Prices ($) and Units of selected Categories of CPI 2019 ($) Item Unit 2020 ($) 2021 ($) Food 10 6.00 5.50 6.75 Energy Other items 5 2.50 1.80 2.90 25 20.00 19.00 22.50

(1) Consumer Price Index (CPI) is a price indicator to reflect price levels over time. As a key economic indicator, CPI is computed monthly by the Bureau of Labor Statistics (BLS) using a “market basket" purchased by the typical consumer each month. Suppose you are doing a study to yearly price levels (CPI) of a metropolitan area in the US. Its CPI includes three categories, Food (grocery), Energy (gasoline) and other items (all goods and services less food and energy). The table below provides you the prices of the three categories in 2019, 2020 and 2021. Also, you have the units purchased by a typical consumer in these three categories. Use 2019 as the base year, to show step-by-step solutions for CPI in 2019, 2020 and 2021. Prices ($) and Units of selected Categories of CPI 2019 ($) Item Unit 2020 ($) 2021 ($) Food 10 6.00 5.50 6.75 Energy Other items 5 2.50 1.80 2.90 25 20.00 19.00 22.50

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 6PA

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