The following table shows the consumption categories used to compute the consumer price index in a hypothetical economy,their weights as percentages in a typical consumer's total expenditure,and the price ratios relative to the base year.

a)Calculate the consumer price index in Year 1 and Year 2.
b)Calculate the inflation rate in Year 1 and Year 2.
c)Explain how the weights in column 2 were determined.Discuss the meaning of "Price of food."

Question

The following table shows the consumption categories used to compute the consumer price index in a hypothetical economy,their weights as percentages in a typical consumer's total expenditure,and the price ratios relative to the base year.
  
a)Calculate the consumer price index in Year 1 and Year 2.
b)Calculate the inflation rate in Year 1 and Year 2.
c)Explain how the weights in column 2 were determined.Discuss the meaning of "Price of food."

Quizplus · Accepted Answer

The Answer of The following table shows the consumption categories used to compute the consumer price index in a hypothetical economy,their weights as percentages in a typical consumer's total expenditure,and the price ratios relative to the base year.
  
a)Calculate the consumer price index in Year 1 and Year 2.
b)Calculate the inflation rate in Year 1 and Year 2.
c)Explain how the weights in column 2 were determined.Discuss the meaning of "Price of food."

The Following Table Shows the Consumption Categories Used to Compute