Explain what percentage change in the price of each

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Reference no: EM1348538

Suppose that people consume only three goods, as shown in this table:
Tennis Balls Gold Balls Bottle of Gatorade
2009 price 2 dollars 4 dollars 1 dollar
2009 quantity 100 100 200
2010 price 2 dollars 6 dollars 2 dollars
2010 quantity 100 100 200

a) What percentage change in the price of each of the three goods?
b) Using a method similar to the consumer price index, compute the percentage change in the overall price level.
c) If you were to learn that a bottle of Gatorade increased in size from 2009 to 2010, should that information affect your calculation of the inflation size? If so, how?
d) If you were to learn that Gatorade introduced new flavors in 2010, should that information affect your calculation of the inflation rate? If so, how?

Reference no: EM1348538

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