(Answered) Percentage increases in the price of food

Management Studies

Problem:

In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing.

	Food	Clothing
2002 price per unit	$4	$10
2003 price per unit	$6	$20

Required:

Question 1: What are the percentage increases in the price of food and in the price of clothing?

Question 2: What is the percentage increase in the CPI?

Question 3: Do these price changes affect all consumers to the same extent? Explain.

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Business Management, Management Studies

Category:- Business Management
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