Problem
a. Suppose an economy has only three goods, and the typical family purchases the amounts given in the following table. If 2005 is the base year, then, what is the CPI for 2012? Show all working out.
|
Product
|
Quantity (2005)
|
Price (2005)
|
Price (2012)
|
|
Computers
|
1
|
$1700
|
$1200
|
|
Books
|
10
|
$25
|
$30
|
|
Burgers
|
50
|
$1.00
|
$2.00
|
|
Total
|
|
|
|
b. Explain how the CPI is constructed and discuss any weaknesses with this measurement technique
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.