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A representative consumer of Paradiseland consumes only three goods: carrots, coffee and pants. Use the information provided in the table below to answer the following
A representative consumer of Paradiseland consumes only three goods: carrots, coffee and pants. Use the information provided in the table below to answer the following questions.
Year
Price of carrots (kg)
Quantity of carrots
Price of coffee (kg)
Quantity of coffee
Price of pants
Quantity of pants
2019
2.25
4
5
2
10
2
2020
2.50
6
5.6
3.5
15
2
a)Use 2019 as the base year. What is the CPI basket?
b)Compute the CPI index for each year.
c)Compute the inflation between 2019 and 2020.
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