Suppose that the residents of vegopia spend all of their


Suppose that the residents of Vegopia spend all of their income on Cauliflower, broccoli, and carrots. In 2008, they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for $75, and 500 carrots for $50. In 2009, they buy 75 heads of cauliflower for $225, 80 bunches of broccoli for $120, and 500 carrots for $100.

a. Calculate the price of each vegetable in each year.

b. Using 2008 as the base year, calculate the CPI for each year.

c. What was the inflation rate in 2009?

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Econometrics: Suppose that the residents of vegopia spend all of their
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