Measurement of inflation, Managerial Economics

Assignment Help:

Measurement of Inflation

The rate of inflation is measured using the Retail Price Index.  A retail Price Index aims to measure the change in the average price of a basket of goods and services that represents the consumption pattern of a typical household.  It estimates the change in the cost to consumers of a range of commodities that they typically buy.  It is usually prepared for different classes of consumers and for different areas. 

The calculation of the index requires:

  • Selection of commodities to be included in the consumers basket
  • Selection of the base period weights for each commodity
  • Date on prices of the commodities in the current period and in the base period

Such an index then estimates the cost of living or the purchasing power of incomes. If the index increases by 10% in a given period, wages would need to rise by 10% for purchasing power to remain constant.  It is in this regard that trade unions and workers demand that wages should increase pari-passu with the cost of living index.


Related Discussions:- Measurement of inflation

Effects of fluctuations in exchange rates, Effects of Fluctuations in Excha...

Effects of Fluctuations in Exchange Rates When a country's currency depreciates, exporting firms may have competitive advantage but businesses which rely on imports for raw ma

Elasticity, The acme paper company lowers its price of envelopes (1000 cou...

The acme paper company lowers its price of envelopes (1000 count) from $6to $5.40.

What do mean by convex isoquant, Q. What do mean by Convex Isoquant? I...

Q. What do mean by Convex Isoquant? Isoquants are convex to the origin: At any point of an isoquant,the slope is negative. Its numerical value measures the marginal rate of te

State the relevant economic quantities, State the relevant economic quantit...

State the relevant economic quantities Managerial economics helps the management in predicting numerous economic quantities like profit, cost, capital, demand, price, productio

Start-up company , Let consider the economy (above) again where the followi...

Let consider the economy (above) again where the following set of stocks is traded:     x 1 =(2,2,0)    x 2 =(1,0,3)  x 3 =(0,2,4)          for the prices (p 1 , p 2 , p 3 )=(1,

The extreme end of the beach, Assume that Nicolas and Orson plan to sell so...

Assume that Nicolas and Orson plan to sell soft drinks on a beach this summer. The beach is 400 meters long and sunbathers are spread evenly across its length. Nicolas and Orson se

Range of alternative uses of a commodity, Broader the range of other uses o...

Broader the range of other uses of a commodity, higher the price elasticity of its demand intended for the fall in price though less elastic for the increase in price. As price of

Diseconomies of scale, what are the four factors that lead to diseconomies ...

what are the four factors that lead to diseconomies of scale.

Why do monopolies exist, Why Do Monopolies Exist? Monopolists have mark...

Why Do Monopolies Exist? Monopolists have market power and as a consequence will charges higher prices and generate less output than a competitive industry. It produces profit

What is external diseconomies, Q. What is External Diseconomies? The ex...

Q. What is External Diseconomies? The expansion of an industry is likely to generate external diseconomies that raise the cost of production. An increase in the size of industr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd