This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Living Indexes Arnold spends all his money on sunscreen and lemonade. In June he bought 5 ounces of sunscreen at $1.00
per ounce and 20 gallons of lemonade at $1.20 per gallon. In July he bought 7 ounces of sunscreen at $1.10
per ounce and 18 gallons of lemonade at $1.50 per gallon. In August he bought 3 ounces of sunscreen at
$1.50 per ounce and 23 gallons of lemonade at $2.00 per gallon.
a. Create a Laspeyres price index using June as the base period (that is, use Arnold's consumption bundle for
http://e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie wSingle 1/3 1/22/2014 Assignme nt Pr int Vie w June to create the fixed weights). How did his cost of living change according to this measure? Instructions: Round your answers to 1 decimal place. Prices between June and July changed by changed by 22.4 ± .5 percent, and prices between July and August 33.8 ± .5 percent. b. C...
View Full Document
This note was uploaded on 01/22/2014 for the course ECO 3352 taught by Professor Ax during the Fall '13 term at Troy.
- Fall '13