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Suppose that the residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2005, they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for $75, and 500 carrots for $50. In 2006 they buy 75 heads of cauliflower for $225, 80 bunches of broccoli for $120, and 500 carrots for $100. If the base year is 2005, what is the CPI in both years? What is the inflation rate in 2006?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M961703

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