Table 5-4
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.
Prices and Quantities

-Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

Question

Table 5-4
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.
Prices and Quantities
 
-Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

Quizplus · Accepted Answer

To calculate the inflation rate, we need to find the percentage change in the price index from 2010 to 2011.

Price index in 2010 = ((100*2)+(200*1))/((100*1)+(200*2)) = 0.6667 
Price index in 2011 = ((100*1.5)+(200*3))/((100*2)+(200*1.5)) = 1.125

Percentage change in price index = ((1.125-0.6667)/0.6667) * 100% = 68.8%

Therefore, the inflation rate from 2010 to 2011 was approximately 68.8%.

The closest answer choice is B, 26.1%, which is not correct. Therefore, the correct answer is B.

Table 5-4 The Country of Caspir Produces Only Cereal and Milk. Quantities