Posted by shelby on .
Suppose that the residents of Veggieland spend all of their income on cauliflower, broccoli, and carrots. In 1998 they buy 100 heads of cauliflower for $200,50 bunches of broccoli for $75, and 500 carrots for $50. In 1999 they buy 75 heads of cauliflower for $225,80 bunches of broccoli for $120, and 500 carrots for $100. If the base year is 1998, what is the CPI in both years? What is the inflation rate in 1999?
So, take a shot. Remember, the CPI is a weighted average of the percentage change in prices. Hint: I get CPI in 1999 as 146.2