Consider an economy populated with students who consume three goods: textbooks, cola, and pizzas. In 2010, they purchased 17 textbooks, 420 cans of cola, and 255 pizzas. The following table shows the prices of these three goods for the years 2010, 2011, and 2012.

a. What is the percent change in prices of each of the goods from 2010 to 2011 and from 2011 to 2012?

b. Calculate the CPI for each of the three years using 2010 as a base year. What is the percent change in CPI from 2010 to 2011 and from 2011 to 2012?

Transcribed Image Text:

Year Textbook 100 Cola Pizzas 1.0 2010 1.25 150 2011 10 195 2012 1.35 11.50