To construct a consumer price index (CPI) let the reference basket of g/s be comprised of 500 litres of water (per year), 300 kilos of apples (per year), and 200 kilos of almonds (per year). We are holding the reference basket of goods fixed in each year. Let P = the per-unit market price in each year; Q= the estimated number of units purchased of a good; the Q for each good is held fixed (constant) for each year. Based on the above table, and using information from your class notes: 1) Calculate the cost of the reference basket in each year. 2) Calculate the cost of living in each year. 3) Explain the relation between your answers to questions 1 and 2. 4) Calculate the CPI for each year, using 2020 as the base year. 5) Using the CPI for 2020, and the CPI for 2021, calculate the % change in the Cost of Living from 2020 to 2021. 6) Using the CPI for 2021, and the CPI for 2022, calculate the % change in the Cost of Living from 2021 to 2022. 7) Using the CPI for 2020, and the CPI for 2021, calculate the % change from 2020 to 2021 of the average price level of the goods that comprise the reference basket. 8) Using the CPI for 2021, and the CPI for 2022, calculate the % change from 2021 to 2022 of the average price level of the goods that comprise the reference basket. 9) Explain the relation between your answers to questions 5 and 7. 10) Explain the relation between your answers to questions 6 and 8. 11) Explain why the CPI in the base year always equals 1.00 (x 100 = 100, by convention). year 2020 2021 2022 Good A Litres of water PAX QA 2 X 500 4 X 500 66 X 500 Good B Kilos of apples PBX QB 3 X 300 5* X 300 7 X 300 Good C Kilos of almonds PcX Qc 86 X 200 10% X 200 126 X 200 Cost of Living