Question

Consider an economy that produces and consumes only three types of fruit: apples, oranges and bananas. In 2009 and 2010, the production/consumption and price data were as follows: 2009: Fruit Quantity Price Apples 3000 $2 per unit Bananas 6000 $3 per unit Oranges 8000 $4 per unit 2010: Fruit Quantity Price Apples 4000 $3 per unit Bananas 14000 $2 per unit Oranges 8000 $5 per unit Let us work towards computing CPI for the two years, using 2009 as the reference base year and 2010 as the expenditure base year. First, we need to compute the cost of the consumer's basket in different years. A. The cost of the basket in the reference base year is [A] dollars. B. The cost of the basket in 2009 is [B] dollars. C. The cost of the basket in 2010 is [C] dollars

          Consider an economy that produces and consumes only three types of fruit: apples, oranges and bananas. In 2009 and 2010, the production/consumption and price data were as follows:

2009:
Fruit Quantity Price
Apples 3000 $2 per unit
Bananas 6000 $3 per unit
Oranges 8000 $4 per unit

2010:
Fruit Quantity Price
Apples 4000 $3 per unit
Bananas 14000 $2 per unit
Oranges 8000 $5 per unit
Let us work towards computing CPI for the two years, using 2009 as the reference base year and 2010 as the expenditure base year. First, we need to compute the cost of the consumer's basket in different years.

A. The cost of the basket in the reference base year is [A] dollars.
B. The cost of the basket in 2009 is [B] dollars.
C. The cost of the basket in 2010 is [C] dollars

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Consider an economy that produces and consumes only three types of fruit: apples, oranges and bananas. In 2009 and 2010, the production/consumption and price data were as follows:

2009:
Fruit Quantity Price
Apples 3000 2 per unit
Bananas 60003 per unit
Oranges 8000 4 per unit

2010:
Fruit Quantity Price
Apples 40003 per unit
Bananas 14000 2 per unit
Oranges 80005 per unit
Let us work towards computing CPI for the two years, using 2009 as the reference base year and 2010 as the expenditure base year. First, we need to compute the cost of the consumer's basket in different years.

A. The cost of the basket in the reference base year is [A] dollars.
B. The cost of the basket in 2009 is [B] dollars.
C. The cost of the basket in 2010 is [C] dollars

Added by Megan F.

Principles of Economics

Gregory Mankiw 8th Edition

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Solved by Expert Anjali Kurse

05/27/2023

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The cost of the basket in the reference base year is [A] dollars. Show more…

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Consider an economy that produces and consumes only three types of fruit: apples, oranges, and bananas. In 2009 and 2010, the production/consumption and price data were as follows: 2009: Fruit Quantity Price Apples 3000 $2 per unit Bananas 6000 $3 per unit Oranges 8000 $4 per unit 2010: Fruit Quantity Price Apples 4000 $3 per unit Bananas 14000 $2 per unit Oranges 8000 $5 per unit Let us work towards computing CPI for the two years, using 2009 as the reference base year and 2010 as the expenditure base year. First, we need to compute the cost of the consumer's basket in different years. A. The cost of the basket in the reference base year is [A] dollars. B. The cost of the basket in 2009 is [B] dollars. C. The cost of the basket in 2010 is [C] dollars.

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Transcript

00:01 Okay, let's figure out this cpi.

00:03 So we're gonna start with our base year, which is 2009.

00:13 Here, the price of a basket is the sum of all of these things in these quantities.

00:19 So apples are 3 ,000 at $2 per.

00:24 That's 6 ,000.

00:29 Bananas, there were 6 ,000 at $3 per, which is 18 ,000.

00:37 For oranges, there were 8 ,000 at $4 per, which is 24 ,000.

00:49 So basically, this is a sum of $48 ,000, which is kind of insane for just fruits, you know? but then when we go to 2010, got a bit of a change.

01:08 Our basket here has the same components because that's what makes the basket a basket, but different amounts and different prices.

01:21 So we've got 4 ,000 apples at $3 per is $12 ,000.

01:27 We've got 14 ,000 bananas at $2 per, and then 8 ,000 oranges at $5 per.

01:48 Whoa, i wouldn't pay $5 for an orange.

01:54 Okay, this sums up to 80 ,000.

01:58 Okay, so in the reference year, our cost is 48 ,000.

02:05 Reference year, that's our cost.

02:11 And then we're gonna basically scale this down to $100, and you'll see exactly how i do that in a second.

02:18 But then we have 80 ,000.

02:21 80 ,000 over 48 ,000 is basically the ratio of each year, so to the base year...

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