Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year?
A)-10%
B)10.13%
C)-9.09%
D)8.99%

Question

Quizplus · Accepted Answer

To calculate the inflation rate, first, calculate the total cost of the basket for each year. Last year: (50 * $2.50) + (100 * $1.50) + (50 * $0.75) + (8 * $4) = $125 + $150 + $37.5 + $32 = $344.5. This year: (50 * $2.50) + (100 * $1.80) + (50 * $0.80) + (8 * $4.30) = $125 + $180 + $40 + $34.4 = $379.4. The inflation rate is [(379.4 - 344.5) / 344.5] * 100 = 10.13%.

Consider the Following Basket of Goods: 50 Bottles of Milk