Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 1, Problem 2E
(a)
To determine
Calculation of real price.
(b)
To determine
Calculation percentage changes in real price.
(c)
To determine
Calculation of real price.
(d)
To determine
Calculation percentage changes in real price.
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Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980.
1980
2010
100.00
1.96
218.06
3.12
CPI
Retail price of butter
Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.)
Real price of butter
1980
1.96
CPI
1990
158.56
1.94
1980
1990
1.22
Between 1980 and 2000, the real price of butter has decreased
What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000?
The real price of butter has decreased by 42.35 %. (Enter your response rounded to two decimal places.)
Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars.
To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.)
1990
100
2000
208.98
2.37
2000
1.13
2000
■…
The table below gives the CPI and the price of gasoline per gallon in the fictitious country "Alpha" between 2010 and 2015. For each year find the percent change in the price of gasoline from the previous year's price, the CPI inflation rate, and the change in the relative price of gasoline. Instructions: Enter your responses rounded to two decimal places for change in gasoline price and inflation, and one decimal place for percent values in the relative price change. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
Year
Gasoline price ($/gallon)
Percent change in gasoline price
CPI
Inflation
Change in relative price of gasoline
2010
$0.80
—
1.60
—
—
2011
$1.00
%
1.80
%
%
2012
$1.25
%
2.00
%
%
2013
$1.65
%
2.04
%
%
2014
$1.70
%
2.21
%
%
2015
$1.87
%
2.25
%
%
Question-01:
The following table shows the average retail price of butter and the
Consumer Price Index from 1980 to 2010, scaled so that the CPI 100 in
1980.
1980 1990
2000 2010
CPI
100
158.56 208.98218.06
Retail price of butter
(salted, grade AA, per lb.) $1.88 $1.99 $2.52 $2.88
Calculate the real price of butter in 1980 dollars. Has the real
price increased/decreased/ stayed the same from 1980 to 2000? From
а.
1980 to 2010?
b.
What is the percentage change in the real price (1980 dollars)
from 1980 to 2000? From 1980 to 2010?
с.
Convert the CPI into 1990 ] 100 and determine the real price of
butter in 1990 dollars.
d.
What is the percentage change in the real price (1990 dollars)
from 1980 to 2000? Compare this with your answer in (b). What do
you notice? Explain.
Chapter 1 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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Similar questions
- Part II Question-01: The following table shows the average retail price of butter and the Consumer Price Index from 1980 to 2010, scaled so that the CPI 100 in 1980. CPI Retail price of butter (salted, grade AA, per lb.) 1980 100 $1.88 1990 158.56 $1.99 2000 208.98 $2.52 2010 218.06 $2.88 a. Calculate the real price of butter in 1980 dollars. Has the real price increased/decreased/ stayed the same from 1980 to 2000? From 1980 to 2010? b. What is the percentage change in the real price (1980 dollars) from 1980 to 2000? From 1980 to 2010? c. Convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. d. What is the percentage change in the real price (1990 dollars) from 1980 to 2000? Compare this with your answer in (b). What do you notice? Explain.arrow_forwardThe table below gives the CPI and the price of gasoline per gallon in the fictitious country "Alpha" between 2010 and 2015. For each year find the percent change in the price of gasoline from the previous year's price, the CPI inflation rate, and the change in the relative price of gasoline. Instructions: Enter your responses rounded to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Year Gasoline price ($/gallon) Percent change in gasoline price CPI Inflation Change in relative price of gasoline 2010 $0.80 — 1.60 — — 2011 $1.00 % 1.80 % % 2012 $1.25 % 2.00 % % 2013 $1.65 % 2.04 % % 2014 $1.70 % 2.21 % % 2015 $1.87 % 2.25 % %arrow_forward
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