Suppose that people consume only three goods, as shown in this table: | |Tennis | | | |Tennis...
Question:
Suppose that people consume only three goods, as shown in this table:
| Tennis | |||
| Tennis Balls | Racquets | Gatorade | |
| 2014 price | $2 | $40 | $1 |
| 2014 quantity | 100 | 10 | 200 |
| 2015 price | $2 | $60 | $2 |
| 2015 quantity | 100 | 10 | 200 |
a. What is the percentage change in the price of each of the three goods? What is the percentage change in the overall price level?
b. Do tennis racquets become more or less expensive relative to Gatorade? Does the well-being of some people change relative to the well-being of others? Explain.
Inflation Rate:
The inflation is a concept when there is is an increase in the average price level in the economy whereas on the other hand when the average price level is falling then such a process is known as deflation.
Answer and Explanation: 1
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