Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer.

Prices

Product

Market Basket of Goods

2010

2015

Mocha coffee

100

cups

$2.00

per cup

$2.50

per cup

Sweet pudding

50

quarts

$1.50

per quart

$2.20

per quart

Cassava leaf salad

25

packages

$1.00

per package

$1.20

per package

The nation of Kona cultivates coffee beans and cassava, from which all their consumer goods are produced.

(a) Calculate the cost of the market basket of goods in the table in2010

and in2015

.Show your work.

(b) Use2010

as the base year to calculate the price indices for2010

and2015

for the market basket of goods in the table.Show your work.

(c) In order for a citizen of Kona to maintain the same standard of living between2010

and2015

, what percentage change in nominal income would be needed? Explain.