Suppose that we have the following price data Year Price of Gasoline Price of Soda 1987 $.89 per gallon $.35 per 16 oz. bottle 2005 $ 2.39 per gallon $1.49 per 16 oz. bottle a) Calculate the percentage change in the price of each good. b) Calculate the percentage change in the relative price of gasoline in terms of soda. Year Relative Price of Gasoline 1987 $.89 / .35 = 2.54 2005 $ 2.39 /1.49 = 1.60 c) Why do we only worry about relative prices in economics
Suppose that we have the following price data Year Price of Gasoline Price of Soda 1987 $.89 per gallon $.35 per 16 oz. bottle 2005 $ 2.39 per gallon $1.49 per 16 oz. bottle a) Calculate the percentage change in the price of each good. b) Calculate the percentage change in the relative price of gasoline in terms of soda. Year Relative Price of Gasoline 1987 $.89 / .35 = 2.54 2005 $ 2.39 /1.49 = 1.60 c) Why do we only worry about relative prices in economics
Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: Measuring The Cost Of Living
Section: Chapter Questions
Problem 3PA
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Question
Suppose that we have the following price data
Year
Price of Gasoline
Price of Soda
1987
$.89 per gallon
$.35 per 16 oz. bottle
2005
$ 2.39 per gallon
$1.49 per 16 oz. bottle
a) Calculate the percentage change in the price of each good.
b) Calculate the percentage change in the relative price of gasoline in terms of soda.
Year
Relative Price of Gasoline
1987
$.89 / .35 = 2.54
2005
$ 2.39 /1.49 = 1.60
c) Why do we only worry about relative prices in economics?
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