# hw3_key - Homework 3 Key P1 P2 Find the CPI for the 1st...

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1 Homework 3 Key P1 Find the CPI for the 1st half of 2006 Source: http://www.bls.gov/cpi/ 200.6 P2 The following data comes from: http://www.airlines.org/econ/d.aspx?nid=9336 Use the data to derive a cost index for crude oil with 1983 the base. Crude Oil YEAR \$/bbl Index 1977 14.3 47 1978 14.85 49 1979 22.4 74 1980 37.38 123 1981 36.67 121 1982 33.64 111 1983 30.4 100 1984 29.28 96 1985 27.97 92 1986 15.06 50 1987 19.17 63 1988 15.96 53 1989 19.59 64 1990 24.5 81 1991 21.48 71 1992 20.56 68 1993 18.46 61 1994 17.19 57 1995 18.43 61 1996 22.15 73 1997 20.6 68 1998 14.4 47 1999 19.25 63 2000 30.3 100 2001 25.92 85 2002 26.1 86 2003 31.14 102 2004 41.44 136 2005 56.48 186 1st half - 06 66.84 220

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2 P3 Discussion: Between 1983 and 2002 the cost of crude oil was at or below the CPI. This means the cost of oil increased at a lower rate than general inflation. Only recently has the cost of crude more expensive than the costs described the CPI. P4 Year Index Cost 2001 213 \$200,000 2006 293 \$275,117 Ratio (index 2/index 1) = 1.375586854 P5 Year Cost of 150 Size 1 2001 \$200,000 Economy of scale factor 0.9 2 2006 \$275,117 Ratio(size 2/size 1) 1.333333333 Cost of 2 \$356,421 Cost of plant of size 150 in 2006 \$275,117 P6 K = 130 Number of hours to produce the first unit.
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## This note was uploaded on 05/13/2010 for the course ME 01953 taught by Professor Bard during the Spring '10 term at University of Texas.

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hw3_key - Homework 3 Key P1 P2 Find the CPI for the 1st...

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