10. Suppose that the following table shows the average retail price of butter (t
ID: 1132466 • Letter: 1
Question
10. Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI- 100 in 1980. CPI Retail price of butter 1980 100.00 1.92 1990 158.56 1.76 2000 208.98 2.36 2010 218.06 3.08 Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below) 1980 1990 2000 2010 Real price of butter Between 1980 and 2000, the real price of butter has (1) What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by Next, convert the CPI into 1990 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPl into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) %. (Enter your response rounded to two decimal places.) 1980 1990 2000 2010 al price of butter CP Next, determine the real price of butter in 1990 dollars in the table above. What is the percentage change in real price (1990 dollars) from 1980 to 2000? The real price of butter decreased by Compare the percentage change using 1980 dollars with the percentage change using 1990 dollars. Allowing small rounding errors, the percentage change in the price of butter between 1980 and 2000 using 1980 dollars is (2) (1) O stayed the same (2) O smaller than %. (Enter your response rounded to two decimal places.) the percentage change using 1990 dollars. O increased O decreased O larger than the same asExplanation / Answer
Real price = Retail price/CPI(nth year) x CPI (base year)
Between 1980 and 2000, the real price of butter has decreased.
It has decreased by = (1.92 - 1.13)/1.92 x 100 = 41.18%
New CPI (nth year) = old CPI (nth year)/old CPI (1990) x 100
The real price of butter decreased by = (3.04 - 1.79)/3.04 x 100 = 41.18%
The percentage change in the price of butter between 1980 and 2000 using 1980 dollars is the same as the percentage change using 1990 dollars.
1980 1990 2000 2010 CPI 100 158.56 208.98 218.06 Retail price 1.92 1.76 2.36 3.08 Real price 1.92 1.11 1.13 1.41Related Questions
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