Suppose an Economy Has Only Three Goods,and the Typical Family

question 96

Multiple Choice

Suppose an economy has only three goods,and the typical family purchases the amounts given in the following table.If 2012 is the base year,then what is the CPI for 2017? $$\begin{array} { | c | c | c | c | c | c | } \hline \text { Product } & \begin{array} { c } \text { Quantity } \\\text { (2012) }\end{array} & \begin{array} { c } \text { Price } \\\text { (2012) }\end{array} & \begin{array} { c } \text { Expenditures } \\\mathbf { ( 2 0 1 2 ) }\end{array} & \begin{array} { c } \text { Price } \\\text { (2017) }\end{array} & \begin{array} { c } \text { Expenditures (on base } \\\text { year quantities) (2017) }\end{array} \\\hline \text { Computers } & 1 & \$ 1500 & \$ 1500 & \$ 1200 & \$ 1200 \\\hline \text { Books } & 10 & \$ 25 & \$ 250 & \$ 30 & \$ 300 \\\hline \text { Burgers } & 50 & \$ 1.00 & \$ 50 & \$ 2.00 & \$ 100 \\\hline \text { Total } & & & \$ 1800 & & \$ 1600 \\\hline\end{array}$$

• A) 89
• B) 125
• C) 212
• D) 163

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Definitions:

Productivity

Productivity measures the efficiency of production in terms of the amount of goods and services produced from a given amount of inputs, such as labor and capital, within a specific period.

Derived Demand

Derived demand refers to the demand for a good or service that originates from the demand for another good or service.

Final Demand

The demand for finished goods and services by consumers, businesses, and government, excluding intermediate goods.

Selling Price

The amount of money for which something is sold, determining the profit or loss made from a transaction.