The Following Are the Two CPI Series (One for 1985-1989

question 21

Essay

The following are the two CPI series (one for 1985-1989 with base 1980 = 100 and the other for 1989-1992 with base 1990 = 100) published in various issues of ABS publications. Create a new CPI series for the period 1985-1992 with 1990 as the base year. $$\begin{array}{l}\text { Consumer price index with different base periods, Australia }\\\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Baseperiod } \\( \mathbf { 1 9 8 0 } = \mathbf { 1 0 0 } )\end{array} & \begin{array} { c } \text { Base period } \\( \mathbf { 1 9 9 0 } = \mathbf { 1 0 0 } )\end{array} \\\hline 1985 & 148.7 & \\\hline 1986 & 162.6 & \\\hline 1987 & 174.5 & \\\hline 1988 & 187.3 & \\\hline 1989 & 202.3 & 95.0 \\\hline 1990 & & 100.0 \\\hline 1991 & & 105.3 \\\hline 1992 & & 107.3 \\\hline\end{array}\end{array}$$

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Definitions:

Inelastic Demand

Describes a situation where the demand for a product does not change significantly in response to a change in the product's price.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, such as high startup costs, strict regulations, or strong brand loyalty.

Lerner Indices

A measure of a firm's market power calculated by the difference between price and marginal cost relative to the price.

Marginal Cost

The additional cost incurred by producing one more unit of a product, reflecting the cost of the resources used in the production of that extra unit.