Question

In: Economics

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The...

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

GOOD	QUANTITY (millions)	PRICE 2017 ($)	PRICE 2018 ($)
Coconuts	100	0.95	0.90
Pineapples	260	1.20	1.40
Lobsters	210	2.00	2.00

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Suppose the simple island economy of Macroland only produces three goods, coconuts, pineapples and lobsters. The price and output data for selected years is shown below. The CPI for 2018 is equal to

GOOD	QUANTITY (millions)	PRICE 2017 ($)	PRICE 2018 ($)
Coconuts	100	0.95	0.90
Pineapples	260	1.20	1.40
Lobsters	210	2.00	2.00

Select one:

a. 147

b. 105.7

c. 94.6

d. 874

e. none of the above

Expert Solution

PROBLEM-1

the correct answer for the given problem is second option.

SOLUTION-we can solve the problem as follows-

STEP-1

first of all we would calculate the value of all the three goods for the year 2017.we would calculate the value by multiplying price to quantity.price would be taken for the year 2017.

STEP-2

now, we would calculate the value of all the three goods for the year 2018 and we would take the price of 2018 and then multiply the quantity with it.we would obtain the value of goods in 2018 as follows-

STEP-3-

we would calculate the CPI by dividing the value of goods in 2018 by the value of goods in 2017 and then multiply the obtained value by 100.the value would be somewhere aroung 105.68 which would be rounded-off to 105.7.

PROBLEM-2.

the correct option for the second problem is second option.

SOLUTION-

as we can observe and analyze that second question is exactly similar to the previous problem that is problem 1,

NOTE-

therefore the steps and calculation would remain same as answered in the first problem.

And therefore the value of goods in 2017 would be $827 and value of goods in 2018 would be $874 and the CPI would be equal to 105.7

Rahul Sunny answered 1 year ago

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