market basket of goods used to compute the CPI C 10 units of clothing. Food $4 $6 Clothing $10 2002 price per unit 2003 price per unit $20 a. What are the percentage increases in the price of for b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Measuring The Cost Of Living
Section: Chapter Questions
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1. In a simple economy, people consume only 2 goods, food and clothing.
market basket of goods used to compute the CPI consists of 50 units of food and
10 units of clothing.
Food
$4
$6
Clothing
$10
2002 price per unit
2003 price per unit
$20
a. What are the percentage increases in the price of food and in the price of clothing?
What is the percentage increase in the CPI?
b.
c. Do these price changes affect all consumers to the same extent? Explain.
Transcribed Image Text:1. In a simple economy, people consume only 2 goods, food and clothing. market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing. Food $4 $6 Clothing $10 2002 price per unit 2003 price per unit $20 a. What are the percentage increases in the price of food and in the price of clothing? What is the percentage increase in the CPI? b. c. Do these price changes affect all consumers to the same extent? Explain.
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