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8. Problems and ApplicationsQ3

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

	Tennis Balls	Golf Balls	Bottles of Gatorade
2014
Price	$2	$4	$1
Quantity	100	100	200
2015
Price	$2	$6	$2
Quantity	100	100	200

Complete the following table bycomputing the percentage change in price for each of the threegoods.

	Tennis Balls	Golf Balls	Bottles of Gatorade
PercentageChange

Using a method similar to that used tocalculate the consumer price index, the percentage change in theoverall price level is

.

If you were to learn that a bottle ofGatorade increased in size from 2014 to 2015, that informationwould_______ yourestimation of the inflation rate.

If you were to learn that Gatoradeintroduced new flavors in 2015, that informationwould_________ yourestimation of the inflation rate.

Graded