Pearson eText Economics -- Instant Access (Pearson+)
13th Edition
ISBN: 9780136879459
Author: Michael Parkin
Publisher: PEARSON+
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Chapter 22, Problem 8SPA
To determine
Determine the
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The people on Coral Island buy only juice and cloth.
The CPI basket contains the quantities bought in
2009. The average household spent $60 on juice and
$30 on cloth in 2009 when the price of juice was $2
bottle and the price of cloth was $5 a yard. In the
current year, 2010, juice is $4 a bottle and cloth is $6
a yard.
a
percentage of
the household's budget spent on juice in 2009.
Calculate the CPI basket and the
The people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2013.
The average household spent $22 on juice and $36 on cloth in 2013 when the price of juice was $2 a bottle and the price of cloth was $6 a yard.
In 2014, juice is $4 a bottle and cloth is $6 a yard.
Calculate the CPI basket and the percentage of the household's budget spent on juice in 2013.
The CPI basket is
and
In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute
the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a.
What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase
in the CPI? c. Do these price changes affect all consumers to the same extent? Explain
Chapter 22 Solutions
Pearson eText Economics -- Instant Access (Pearson+)
Ch. 22.1 - Prob. 1RQCh. 22.1 - Prob. 2RQCh. 22.1 - Prob. 3RQCh. 22.1 - Prob. 4RQCh. 22.1 - Prob. 5RQCh. 22.2 - Prob. 1RQCh. 22.2 - Prob. 2RQCh. 22.2 - Prob. 3RQCh. 22.2 - Prob. 4RQCh. 22.2 - Prob. 5RQ
Ch. 22.2 - Prob. 6RQCh. 22.2 - Prob. 7RQCh. 22.3 - Prob. 1RQCh. 22.3 - Prob. 2RQCh. 22.3 - Prob. 3RQCh. 22.3 - Prob. 4RQCh. 22.3 - Prob. 5RQCh. 22.3 - Prob. 6RQCh. 22 - Prob. 1SPACh. 22 - Prob. 2SPACh. 22 - Prob. 3SPACh. 22 - Prob. 4SPACh. 22 - Prob. 5SPACh. 22 - Prob. 6SPACh. 22 - Prob. 7SPACh. 22 - Prob. 8SPACh. 22 - Prob. 9SPACh. 22 - Prob. 10SPACh. 22 - Prob. 11SPACh. 22 - Prob. 12APACh. 22 - Prob. 13APACh. 22 - Prob. 14APACh. 22 - Prob. 15APACh. 22 - Prob. 16APACh. 22 - Prob. 17APACh. 22 - Prob. 18APACh. 22 - Prob. 19APACh. 22 - Prob. 20APACh. 22 - Prob. 21APACh. 22 - Prob. 22APACh. 22 - Prob. 23APACh. 22 - Prob. 24APACh. 22 - Prob. 25APACh. 22 - Prob. 26APACh. 22 - Prob. 27APACh. 22 - Prob. 28APACh. 22 - Prob. 29APA
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- 1. In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing $10 2002 Price $4 2003 Price $6 $20 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explain.arrow_forwardThe table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Suzie's CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. The cost of her CPI market basket in Week 2 is $ 95.75. >>> Answer to 2 decimal places. Gasoline is 36.3 percent of the CPI market basket. >>> Answer to 1 decimal place. Week 1 Item The cost of Suzie's CPI market basket in Week 1 is $ 103.25. >>> Answer to 2 decimal places. The value of Suzie's CPI in Week 2 is >>> Answer to 1 decimal place. Coffee Books Gasoline Week 2 Item Coffee Books Gasoline Concert Quantity 13 cups 1 15 gallons Quantity 13 cups 2 5 gallons 1 ticket Price $2.75 a cup $30.00 each $2.50 a gallon Price $2.75 a cup $15.00 each $3.00 a gallon $95 eacharrow_forwardPete is a student who spends 10 percent of his expenditure on books and supplies, 30 percent on tuition, 30 percent on rent, 10 percent on food and drink, 10 percent on transportation, and the rest on clothing. The price index for each item was 100 in 2009. The table shows the price indexes in 2019. Item Price index in 2019 Books and supplies 172.6 Tuition 169.0 Rent 159.0 Food and drink 129.8 Transportation Clothing 115.4 92.9 What is Pete's CPI in 2019? Pete's CPI in 2019 is >>> Answer to 1 decimal place. [Hint: The contribution of each item to the CPI is its price weighted by its share of total expenditure.]arrow_forward
- The table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Suzie's CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. The cost of Suzie's CPI market basket in Week 1 is $ >>> Answer to 2 decimal places. m Week 1 Item Coffee Books Gasoline Week 2 Item Coffee Books Gasoline Concert Quantity 8 cups 1 25 gallons Quantity 8 cups 4 15 gallons 1 ticket Price $4.00 a cup $25.00 each $2.00 a gallon Price $4.00 a cup $12.50 each $2.50 a gallon $95 eacharrow_forwardKwabena earns 15 GHS per hour for up to 40 hours of work each week. He is paid 30 GHS per hour for every hour in excess of 40. Kwabena faces a 20 percent tax rate. Kwabena receives 80 GHS from the government as part of the Livelihood Empowerment Against Poverty (LEAP) program which is tax-free. There are 110 (non-sleeping) hours in the week. Graph Kwabena’s weekly budget line.arrow_forward1. In a simple economy, people consume only 2 goods, food and cloning. 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.arrow_forward
- In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing. (1) What are the percentage increases in the price of food and in the price of clothing? (2) What is the percentage increase in the CPI? (3) Do these price changes affect all consumers to the same extent? Explain. Food Clothing 2020 price per unit unite ¥8 Y 100 2021 price per unit Y 12e Y 200arrow_forwardThe people on Coral Island buy only juice and cloth. The CPI basket contains the quantities bought in 2019. The average household spent $60 on juice and $30 on cloth in 2019 when the price of juice was $2 a bottle and the price of cloth was $5 a yard. In the current year, 2020, juice is $4 a bottle and cloth is $6 a yard. Calculate the CPI and the inflation rate in 2020. The CPI in 2020 is. >>> Answer to 1 decimal place. ACCORarrow_forward4. Kareem Abdul-Jabbar, a famous basketball player, was paid $1,400,000 per year by the Milwaukee Bucks basketball team in 1969. If the CPI-U in 1969 was 36.7 and the CPI-U for December 2023 was 306.746, how much was Kareem Abdul-Jabbar paid in 2023 dollars?arrow_forward
- In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 40 units of food and 20 units of clothing. Food Clothing Last year's price $10 $ 18 This year's price $14 $21 a) What are the percentage increases in the price of food? Number b) What are the percentage increases in the price of clothing? Number c) What is the percentage increase in the CPI? Numberarrow_forwardInsurance and pensions 11.9% Item a. Entertainment b. Transportation c. Clothing Housing 32.8% Entertainment 5.3% Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (2018 data). 0.053 0.159 0.03 Transportation 15.9% Health care 8.1% Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices. (Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.) Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Item Weight Price Change (Inflation Effect) Impact on CPI 20% -8% 100% Food 12.9% Clothing 3.0% Miscellaneous 10.1%arrow_forwardThe people of Fort Worth buy only juice and cloth. The CPI market basket contains the quantities bought in 2009. The average household spent $60.00 on juice and $30.00 on cloth in 2009 when the price of juice was $2.00 a bottle and the price of cloth was $5.00 a yard. In the current year, 2010, juice is $4.00 a bottle and cloth is $6.00 a yard. Calculate the CPI and inflation rate in 2010. (Note: use formula for finding CPI = (total spending in current year/total spending in base year) x 100 for inflation use formula for change in CPI = (CPI current year – CPI base year/CPI base year) x 100arrow_forward
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