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svp [43]
3 years ago
13

Suppose that the residents of Greenland play golf incessantly. In fact, golf is the only thing they spend their money on. They b

uy golf balls, clubs, and tees. In 2019, they bought 1,000 golf balls for $2.00 each, 100 clubs for $50.00 each, and 500 tees for $0.10 each. In 2020, they bought 1,000 golf balls for $2.50 each, 100 clubs for $75.00 each, and 500 tees for $0.12 each. What was the CPI for each year
Business
1 answer:
andre [41]3 years ago
4 0

Answer:

CPI in 2020 =142.7

CPI in 2019 = 100

Explanation:

Inflation is the increase in the general price level. Inflation erodes the value of money.

<em>Consumer Price Index(CPI ): This is the weighted average price of a basket of goods and services consumed by a typical consumer. It is used to measure the rate of inflation.</em>

The increase in the CPI is taken to be the rate of inflation. For example, the CPI rose to 1.09 from 1.00, this implies an inflation rate of 9% within the time period in focus.

The CPI =

The price of a basket of goods in a current  year ÷ Divided by the price of a basket of goods in  a base year

The consumer price

CPI in 2019 = (1000× $2)  + (100× $50) + ( 500× $$0.10)= 7050

CPI in 2020= (1000× $2.50)  + (100× $75) + ( 500× $$0.12)=10,060

CPI in 2020 = 10,060/7050× 100 =142.7

CPI in 2019 = 100

CPI in 2020 =142.7

CPI in 2019 = 100

Note , we assume the CPI for 2019 is 100, since we were not provided with data to compute the price of a basket of good in 2018

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1,875 units.

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