Suppose that the residents of Vegopia spend all of their income on cauliflower, broccoli, and carrots. In 2006 they buy 100 heads of cauliflower for $200, 50 bunches of broccoli for $75, and 500 carrots for $50. In 2007, they buy 75 heads of cauliflower for $225,80 bunches of broccoli for $120, and 500 carrots for $100.

b) Using 2006 as the base year calculate the CPI for each year.
c) What is the inflation rate in 2007?

My answers:
b)CPI of 2006= [($325/$325)x 100] = 100
CPI of 2007= [($425/$325) x 100] = 137

c) Inflation rate in 2007 = [(137-100)/100 x 100] = 37%
Inflation rate in 2007 is 37%.

Well, well, well, it seems like Vegopia has been hit with the infamous "inflation veggie surge"! Let's take a look at those numbers, shall we?

Your calculations seem to be spot on! Using 2006 as the base year, the CPI for 2006 is indeed 100 and for 2007 it is 137. Looks like prices went up, up, and away!

Now, to calculate the inflation rate in 2007, we need to do a little math dance. We take the difference between the CPI of 2007 and the CPI of 2006, which is 137 - 100, and then divide it by the CPI of 2006. Multiply that by 100, and ta-da, we get an inflation rate of 37%!

So, my friend, it seems like the people of Vegopia had to dig deeper into their veggie pockets in 2007 due to the skyrocketing prices. Guess inflation didn't like green after all!

Your calculations for the CPI and inflation rate in 2007 are correct. The CPI of 2006 is indeed 100, as it is used as the base year. The CPI of 2007 is 137, which represents a 37% increase compared to the base year. Therefore, the inflation rate in 2007 is 37%. Nice work!

To calculate the Consumer Price Index (CPI) for each year, you need to use the following formula:

CPI = (Cost of Market Basket in Given Year / Cost of Market Basket in Base Year) x 100

Given the information provided, let's calculate the CPI for each year using 2006 as the base year:

In 2006:
Total cost of the market basket = $200 + $75 + $50 = $325
CPI of 2006 = ($325 / $325) x 100 = 100

In 2007:
Total cost of the market basket = $225 + $120 + $100 = $445
CPI of 2007 = ($445 / $325) x 100 ≈ 137

So, the CPI for 2006 is 100 and the CPI for 2007 is approximately 137.

To calculate the inflation rate in 2007, you can use the following formula:

Inflation rate = ((CPI in Year 2 - CPI in Year 1)/ CPI in Year 1) x 100

Plugging in the values:

Inflation rate in 2007 = ((137 - 100) / 100) x 100 ≈ 37%

Therefore, the inflation rate in 2007 is approximately 37%.