1 Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000per year to rent the location and buy the stock. In addition, she would have to quit her $50,000per year job as an accountant.

a. Define opportunity cost

b. What is your aunt's opportunity cost of running a hardware store for a year? If your aunt thought she could sell $510,000 worth of merchandise in a year, should she open the store? Explain.

2. The residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2010, they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for $75, and 500 carrots for $50. In 2011, 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 2010 as the base year, calculate the CPI for each year.

c. What is the inflation rate in 2011?