Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI 100 in 1980. 1980 1990 CPI 100.00 Retail price of butter 1.91 158.56 1.86 2000 208.98 2.46 2010 218.06 3.05 Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.) 1980 1990 Real price of butter 1.91 1.17 2000 1.18 2010 1.40 Between 1980 and 2000, the real price of butter has decreased What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by 38.22 %. (Enter your response rounded to two decimal places.) Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) 2010 Real price of butter CPI 1980 1990 2000 100 ☐ ப Next, determine the real price of butter in 1990 dollars in the table above. What is the percentage change in real price (1990 dollars) from 1980 to 2000? The real price of butter decreased by ☐ %. (Enter your response rounded to two decimal places.) Compare the percentage change using 1980 dollars with the percentage change using 1990 dollars. Allowing small rounding errors, the percentage change in the price of butter between 1980 and 2000 using 1980 dollars is the percentage change using 1990 dollars.
Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI 100 in 1980. 1980 1990 CPI 100.00 Retail price of butter 1.91 158.56 1.86 2000 208.98 2.46 2010 218.06 3.05 Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.) 1980 1990 Real price of butter 1.91 1.17 2000 1.18 2010 1.40 Between 1980 and 2000, the real price of butter has decreased What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by 38.22 %. (Enter your response rounded to two decimal places.) Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) 2010 Real price of butter CPI 1980 1990 2000 100 ☐ ப Next, determine the real price of butter in 1990 dollars in the table above. What is the percentage change in real price (1990 dollars) from 1980 to 2000? The real price of butter decreased by ☐ %. (Enter your response rounded to two decimal places.) Compare the percentage change using 1980 dollars with the percentage change using 1990 dollars. Allowing small rounding errors, the percentage change in the price of butter between 1980 and 2000 using 1980 dollars is the percentage change using 1990 dollars.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the
CPI 100 in 1980.
1980
1990
CPI
100.00
Retail price of butter
1.91
158.56
1.86
2000
208.98
2.46
2010
218.06
3.05
Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.)
1980
1990
Real price of butter
1.91
1.17
2000
1.18
2010
1.40
Between 1980 and 2000, the real price of butter has decreased
What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000?
The real price of butter has decreased by 38.22 %. (Enter your response rounded to two decimal places.)
Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars.
To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.)
2010 Real price of butter
CPI
1980
1990
2000
100
☐
ப
Next, determine the real price of butter in 1990 dollars in the table above.
What is the percentage change in real price (1990 dollars) from 1980 to 2000?
The real price of butter decreased by ☐ %. (Enter your response rounded to two decimal places.)
Compare the percentage change using 1980 dollars with the percentage change using 1990 dollars.
Allowing small rounding errors, the percentage change in the price of butter between 1980 and 2000 using 1980 dollars is
the percentage change using 1990 dollars.
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