ECON 104 Lecture 7: Lecture 7
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Calculating inflation using a simple price index:
Consider a fictional price index, the College Student Price Index (CSPI), based on a survey of annual purchases of a typical college student. Suppose the following table shows information on the market basket for the CSPI and the prices of each good in 2012, 2013, and 2014
|
|
Quantity in basket |
2012 |
2013 |
2014 |
|
Price($) Cost of basket($) |
Price($) Cost of basket($) |
Price($) Cost of basket($) |
||
|
Notebooks |
10 |
5 50 |
7 |
11 |
|
Calculators |
1 |
100 100 |
110 |
140 |
|
Large coffees |
150 |
1 150 |
1 |
1 |
|
Energy drinks |
50 |
2 100 |
3 |
4 |
|
Textbooks |
10 |
100 1000 |
120 |
150 |
|
Total cost |
|
1400 |
|
|
|
Price index |
100 |
|
|
The cost of each item in the basket and the total cost of the basket are shown for 2012.
Perform these same calculations for 2013 and 2014, and enter the results in the table.
Suppose the base year for this price index is 2012. Calculate and enter the value of the CSPI for the remaining years in the last row of the table. Between 2012 and 2013, the CSPI increased by..........
Between 2013 and 2014, the CSPl increased by..........
Q7
Marginal cost is
| a. |
total revenue divided by the quantity of output. |
|
| b. |
total profit minus total costs. |
|
| c. |
the change in total cost brought about by selling an additional unit of the good. |
|
| d. |
the change in total revenue brought about by selling an additional unit of the good. |
|
| e. |
the change in total revenue minus the change in total costs. |
4 points
Q8
[Table 1] The dollar amounts that go in blanks (A) and (B) are, respectively,
Table-1
|
(1) |
(2) |
(3) |
|
|
Quantity Sold |
Marginal Revenue |
|
$10 |
10 |
|
|
$10 |
11 |
(A) |
|
$10 |
12 |
(B) |
|
$10 |
13 |
(C) |
|
$10 |
14 |
(D) |
| a. |
$11 and $11. |
|
| b. |
$10 and $10. |
|
| c. |
$10 and $11. |
|
| d. |
$11 and $12. |
4 points
Q9
[Table 1] The dollar amounts that go in blanks (C) and (D) are, respectively,
Table-1
|
(1) |
(2) |
(3) |
|
|
Quantity Sold |
Marginal Revenue |
|
$10 |
10 |
|
|
$10 |
11 |
(A) |
|
$10 |
12 |
(B) |
|
$10 |
13 |
(C) |
|
$10 |
14 |
(D) |
| a. |
$11 and $11. |
|
| b. |
$10 and $10. |
|
| c. |
$10 and $11. |
|
| d. |
$11 and $12. |
4 points
Q10
[Table 1] The demand curve facing the firm represented by the information in this table is
Table-1
|
(1) |
(2) |
(3) |
|
|
Quantity Sold |
Marginal Revenue |
|
$10 |
10 |
|
|
$10 |
11 |
(A) |
|
$10 |
12 |
(B) |
|
$10 |
13 |
(C) |
|
$10 |
14 |
(D) |
| a. |
downward-sloping. |
|
| b. |
upward-sloping. |
|
| c. |
horizontal. |
|
| d. |
vertical. |
4 points
Q11
[Table 2] The dollar amounts that go in blanks (E) is:
Table 2
|
-1 |
-2 |
-3 |
-4 |
-5 |
-6 |
-7 |
|
Quantity Sold |
Marginal Revenue |
Marginal |
Total |
Total |
Profit |
|
|
Price |
Cost |
Cost |
Revenue |
|||
|
$10 |
10 |
80 |
$100 |
$20 |
||
|
$10 |
11 |
(A) |
8 |
88 |
$110 |
$22 |
|
$10 |
12 |
(B) |
(E) |
97 |
(G) |
(I) |
|
$10 |
13 |
(C) |
(F) |
107 |
(H) |
(J) |
|
$10 |
14 |
(D) |
11 |
118 |
$140 |
$22 |
| a. |
$8 |
|
| b. |
$9 |
|
| c. |
$10 |
|
| d. |
$11 |
4 points
Q12
[Table 2] The dollar amounts that go in blanks (F) is:
Table 2
|
-1 |
-2 |
-3 |
-4 |
-5 |
-6 |
-7 |
|
Quantity Sold |
Marginal Revenue |
Marginal |
Total |
Total |
Profit |
|
|
Price |
Cost |
Cost |
Revenue |
|||
|
$10 |
10 |
80 |
$100 |
$20 |
||
|
$10 |
11 |
(A) |
8 |
88 |
$110 |
$22 |
|
$10 |
12 |
(B) |
(E) |
97 |
(G) |
(I) |
|
$10 |
13 |
(C) |
(F) |
107 |
(H) |
(J) |
|
$10 |
14 |
(D) |
11 |
118 |
$140 |
$22 |
| a. |
$8 |
|
| b. |
$9 |
|
| c. |
$10 |
|
| d. |
$11 |
