Compute the consumer price index

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Q1. For m>p2, the demand functions for good 1 and 2 are given by the equations, x1=(m/p2)-1 and x2=p1/p2, where m is income and p1 and p2 are prices. Let the horizontal axis represent the quantity of good 1. Let p1=1 and p2=2. Then for m>2, what is the income offer curve?

Q2. Consider a small economy in which consumers buy only two goods: pies and tarts. In order to compute the consumer price index for this economy for two or more consecutive years, what we assume.

Reference no: EM136407

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