Table The table below lists the per pound prices of meat and

Table The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period. Month Price of Meat S3.50 S3.38 4.0050.60 Price of Potatoes $1.50 February March $1.40 14. Refer to Table. Calculate the cost of a basket of goods for each month. Calculate the inflation rate for February and March 15. Michael Jordan\'s rookie salary in 1984 was $550,000. The CPI in 1984 was 103.9, while the CPI in 2010 was 218.1. What is Michael Jordan\'s rookie salary in 2010 dollars?

Solution

Price of Meat

Price of potatoes

Quantity of Meat

Quantity of potatoes

Cost of basket

CPI

Inflation

January

3.5

1.5

25

15

110

100

February

3.38

0.6

25

15

93.5

85

-15.00%

March

4

1.4

25

15

121

110

10.00%

14. Cost is calculated in the above table

CPI of February = Cost of basket February/Cost of basket January

CPI of March = Cost of basket March/Cost of basket February

Inflation is calculated, february = (85-100)/100)*100 = -15%

March = (121-110)/110)*100 = 10%

15.

The formula = (550000/103.9)*218.1 = $1154524

So, Rookie salary in 2010 dollars = $1154524

	Price of Meat	Price of potatoes	Quantity of Meat	Quantity of potatoes	Cost of basket	CPI	Inflation
January	3.5	1.5	25	15	110	100
February	3.38	0.6	25	15	93.5	85	-15.00%
March	4	1.4	25	15	121	110	10.00%