Question: Question 20 (2 + 2 = 4 marks) (a) The owner of a small caf that specialises in sandwiches has noticed that the prices of

Question 20 (2 + 2 = 4 marks)

(a) The owner of a small caf that specialises in sandwiches has noticed that the prices of the ingredients for her BLT (Bacon, Lettuce and Tomato) sandwich have increased. She records the price of each ingredient in 2019 and in 2020.

	2019 Prices	2020 Prices
Bacon Strips (1 kg)	$13.00	$15.00
Lettuce (1 kg)	$3.00	$4.00
Tomato (1 kg)	$4.00	$7.00

Calculate a simple aggregate price index for 2020, taking 2019 as the base year.

(b) The owner of a small caf that specializes in cups of tea has noticed that the prices of the ingredients for her tea have increased. In 2020, she charged $4.50 for a cup of tea.

The owner went to the Australian Bureau of Statistics and noted the CPI for 2020 and 2021 as follows:

2020 108.20

2021 132.24

What should be the price of a cup of tea in 2021 to keep up with the effects of inflation?

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