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The typical consumer's food basket in the base year 2015 is as follows: 30 chickens at $3 each 10 hams at $6 each 10
The typical consumer's food basket in the base year 2015 is as follows: 30 chickens at $3 each 10 hams at $6 each 10 steaks at $8 each A chicken feed shortage causes the price of chickens to rise to $5.00 each in the year 2016, Hams rise to $7.00 each, and the price of steaks is unchanged. a. Calculate the change in the "cost-of-eating" index between 2015 and 2016. Year 2015 Cost of the basket 2016 Instructions: Enter your responses rounded to one decimal place. The official cost-of-eating index has (Click to select) by %. b. Suppose that consumers are completely indifferent between two chickens and one ham. For this example, how large is the substitution bias in the official "cost-of-eating" index? The change in the cost-of-eating index is ( bias. %. The Click to select) of inflation in the cost of eating reflects substitution
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