3. Problems and Applications Q3

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

	Tennis Balls	Golf Balls	Bottles of Gatorade
2020
Price	$2	$4	$2
Quantity	100	100	200
2021
Price	$2	$6	$3
Quantity	100	100	200

Complete the following table by computing the percentage change in price for each of the three goods.

	Tennis Balls	Golf Balls	Bottles of Gatorade
Percentage Change	___%	___%	___% Using a method similar to that used to calculate the consumer price index, the percentage change in the overall price level is _____% . True or False: If you were to learn that a bottle of Gatorade increased in size from 2020 to 2021, that information would lower your estimation of the inflation rate. True False True or False: If you were to learn that Gatorade introduced new flavors in 2021, that would imply that the inflation rate you estimated is understated. True False