TABLE 16-15
Given Below Are the Prices of a Basket

question 55

Short Answer

TABLE 16-15
Given below are the prices of a basket of four food items from 1996 to 2000.
$\begin{array}{ccccc}&\text { Wheat}&\text { Corn }&\text {Soybeans}&\text { Milk }\\ \text { Year } & \text { (\$/Bushel) } & \text { (\$/Bushel) } & \text { (\$/Bushel) } & \text { (\$/hundredweight) } \\\hline 1996 & 4.25 & 3.71 & 7.41 & 15.03 \\1997 & 3.43 & 27 & 7.55 & 13.63 \\1998 & 2.63 & 23 & 6.05 & 15.18 \\1999 & 2.11 & 1.97 & 4.68 & 14.72\\2000 & 2.16 & 1.9 & 4.81 & 12.32\end{array}$



-Referring to Table 16-15, what is the Paasche price index for the basket of four food items in 2000 that consisted of 40 bushels of wheat, 50 bushels of corn, 35 bushels of soybeans and 60 hundredweight of milk in 2000 using 1996 as the base year?

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Definitions:

Engel Curve

A graphical representation that shows the relationship between a consumer's income and their expenditure on a particular good, illustrating how consumption changes with income.

Utility Function

A representation of how consumer preferences over a set of goods and services are ordered, indicating the level of satisfaction derived from different bundles of goods.

Consumption

The action or process of using up goods and services, typically by households.

Utility Function

It is an economic model representing the preference level of consumers for different combinations of goods and services.