Q1. Suppose that the residents of Vegopia spend all of their income on long beans, bean sprouts, and carrots. In 2006, they buy 100 strands of long beans for RM200.00, 50 kilos of beans sprouts for RM75.00, and 500 carrots for RM50.00. In 2007, they buy 75 strands of long beans for RM225.00, 80 kilos of beans sprouts for RM120.00, and 500 carrots for RM100.00. a. Calculate the price of each vegetable in each year. b. Using 2006 as the base year, calculate the CPI for each year. c. What is the inflation rate in 2007?

Q1. Suppose that the residents of Vegopia spend all of their income on long beans, bean sprouts, and carrots. In 2006, they buy 100 strands of long beans for RM200.00, 50 kilos of beans sprouts for RM75.00, and 500 carrots for RM50.00. In 2007, they buy 75 strands of long beans for RM225.00, 80 kilos of beans sprouts for RM120.00, and 500 carrots for RM100.00. a. Calculate the price of each vegetable in each year. b. Using 2006 as the base year, calculate the CPI for each year. c. What is the inflation rate in 2007?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.2P

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