Table 24-7 The table below lists the prices of chips and salsa for the year 2018, 2019, 2020. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that 2019 is the base period. Year 2018 2019 2020 Price of Chips $2.50 $2.40 $2.60 Price of Salsa $2.50 $2.55 $2.75 Refer to Table 24-7. Calculate the inflation rate for 2020
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- This week Sara’s income falls from $12 to $9 a week, while the price of popcorn isunchanged at $3 a bag and the price of a smoothie is unchanged at $3.g. What is the effect of the fall in Sara’s income on her real income in terms ofsmoothies and in terms of popcorn?h. What is the effect of the fall in Sara’s income on the relative price of a smoothiein terms of popcorn? What is the slope of Sara’s new budget line if it is drawnwith smoothies on the x-axis?My friend Marie decides to set aside $200 from her paycheck every month. How will this affect her demand curve? (You don't have to use specific numbers, just explain) When Marie sets aside money from her paycheck, this is the same thing as a decrease in her income. Remember that when income increases, the demand curve shifts outwards to reflect the increase in spending. In this case, Marie's demand curve will shift inwards as she tries to economize more than usual. She will buy fewer goods, even if the prices don't change. Illustrate in graphThe residents of Vegopia spend all of their income oncauliflower, broccoli, and carrots. In 2020, they spenda total of $200 for 100 heads of cauliflower, $75 for50 bunches of broccoli, and $50 for 500 carrots. In 2021,they spend a total of $225 for 75 heads of cauliflower,$120 for 80 bunches of broccoli, and $100 for 500 carrots.a. Calculate the price of one unit of each vegetable ineach year.b. Using 2020 as the base year, calculate the CPI foreach year.c. What is the inflation rate in 2021?
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- For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe’s preferences for movies and books are summarized by the following information: MOVIES BOOKS NO. PER MONTH TU MU MU/S NO. PER MONTH TU MU MU/S 1 50 — — 1 22 — — 2 80 — — 2 42 — — 3 100 — — 3 52 — — 4 110 — — 4 57 — — 5 116 — — 5 60 — — 6 121 — — 6 62 — — 7 123 — — 7 63 — — a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books. b. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe’s level of satisfaction? Explain briefly. d. Draw the budget…Assume that a college student spends her income on books and pizza. The price of a pizza is $8.00, and the price of a book is $15. If she has $100 of income, she could choose to consumeThe residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2016, they spend a total of $200 for 100 heads of cauliflower, $75 for 50 bunches of broccoli, and $50 for 500 carrots. In 2017, they spend a total of $225 for 75 heads of cauliflower, $120 for 80 bunches of broccoli, and $100 for 500 carrots. a. Calculate the price of one unit of each vegetable each year. b. Using 2016 as the base year, calculate the CPI for each year. c.What is the inflation rate in 2017?