Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012.
-What was the rate of inflation between the two years?
A) 19.44 percent
B) 8.57 percent
C) 6.67 percent
D) 2.38 percent
E) 16.67 percent

Question

Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012. 
-What was the rate of inflation between the two years?
A) 19.44 percent 
B) 8.57 percent 
C) 6.67 percent 
D) 2.38 percent 
E) 16.67 percent

Quizplus · Accepted Answer

To calculate inflation rate, we need to use the formula:

Inflation Rate = [(Price Index Year 2 - Price Index Year 1) / Price Index Year 1] × 100

First, we need to calculate the price index for both years as follows:

Price Index (2012) = (100 × $5) + (200 × $10) + (150 × $20)
= $5000

Price Index (2013) = (150 × $6) + (300 × $12) + (200 × $24)
= $10800

Now, we can calculate the inflation rate as follows:

Inflation Rate = [(10800 - 5000) / 5000] × 100
= 116 / 7
= 16.57%
≈ 16.67%

Therefore, the answer is E) 16.67 percent.

Consider the Following Data That Gives the Quantity Produced and Unit