Unit 5 Assignment
1) Assume there is a simple economy where people consume only 2 goods, food and clothing.
Further assume that the market basket of goods used to compute the CPI consists of 100 units of
food and 20 units of clothing.
2004 price per unit
2005 price per unit
Compute the percentage changes in the price of food and the percentage change in the
price of clothing between 2004 and 2005.
Calculate the percentage change in the CPI between 2004 and 2005.