Suppose that the residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2014 they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for $75, and 500 carrots for $50. In 2015 they buy 75 heads of cauliflower for $225, 80 bunches of broccoli for $120, and 500 carrots for $100. If the base year is 2014, what is the CPI in both years? What is the inflation rate in 2015? /5

a)Determine the fixed basket of goods: 100 heads of cauliflower, 50 bunches of broccoli, 500 carrots.

b)Find the price of each good in each year:

c)Compute the cost of the basket of goods in each year:

d)Choose one year as a base year (2014) and compute the CPI in each year:

e)Use the CPI to compute the inflation rate from the previous year: