If the basket contains 10 hamburgers and 30 peachesthe base

If the basket contains 10 hamburgers and 30 peaches.the base year is 2005,and prices are shown in the table below 4. prices 2005 2006 2007 Hamburgers $20 $22 $24 Peaches $3 $5 $6 a. Compute the cost of the basket in 2005, 2006 and 2007, Show your work. b. Compute the CPl in 2005, 2006 and 2007, Show your work Compute the inflation rate from 2005 to 2006 and from 2006 to 2007. Show your work and interpret your results c.

Solution

Cost=20*Ph+30*Pp

CPI=[Cost of current year basket/cost of base year basket(2005)]*100

Inflation rate-CPI current-CPI base/CPI base

Year	Hamburgers	Peaches	Cost	CPI	Inflation rate
2005	20	3	290	100	-
2006	22	5	370	127.58	.27
2007	24	6	420	113.51	-.11