Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Prices Market Product Basket of 2010 2015 Goods Mocha $2.00 per $2.50 per 100 cups coffee cup cup Sweet $1.50 per $2.20 per 50 quarts pudding quart quart $1.00 per package $1.20 per package Cassava 25 packages leaf salad The nation of Kona cultivates coffee beans and cassava, from which all their consumer goods are produced. (a) Calculate the cost of the market basket of goods in the table in 2010 and in 2015. Show your work. (b) Use 2010 as the base year to calculate the price indices for 2010 and 2015 for the market basket of goods in the table. Show your work. (c) In order for a citizen of Kona to maintain the same standard of living between 2010 and 2015, what percentage change in nominal income would be needed? Explain.

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Prices Market Product Basket of 2010 2015 Goods Mocha $2.00 per $2.50 per 100 cups coffee cup cup Sweet $1.50 per $2.20 per 50 quarts pudding quart quart $1.00 per package $1.20 per package Cassava 25 packages leaf salad The nation of Kona cultivates coffee beans and cassava, from which all their consumer goods are produced. (a) Calculate the cost of the market basket of goods in the table in 2010 and in 2015. Show your work. (b) Use 2010 as the base year to calculate the price indices for 2010 and 2015 for the market basket of goods in the table. Show your work. (c) In order for a citizen of Kona to maintain the same standard of living between 2010 and 2015, what percentage change in nominal income would be needed? Explain.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section30.2: Internalizing Externalities

Problem 2ST

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