Suppose that people consume only three goods, as shown in this table:

Bottle of Tennis Balls Golf Balls Gatorade 2009 price $2 $4 $1 2009 quantity 100 100 200 2010 price $2 $6 $2 2010 quantity 100 100 200

a. What is the 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 rate? 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?