How the two goods constitute the typical market basket

Reference no: EM13205411

Suppose a consumer buys 10 units of good X and 20 units of good Y every year. The following table lists the prices of goods X and Y in the years 2005-2007. Assume that these two goods constitute the typical market basket. Calculate the price indices for these years with 2005 as the base year. Comment on the inflation picture for these years.

Year Good X Good Y
2005 $3 $6
2006 4 7
2007 4.5 7.5

Reference no: EM13205411

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