> #mathematics , #economics > Suppose an economy produce 4 coke in 2019 at the price of 1.50 and 2020 at the price of 2.5, and 2pepsi at the price of 6 in 2019 and 2020 at the price of 8. Calculate the inflation rate in 2020?
###### jacinta johannes
more than 4 weeks ago

# Suppose an economy produce 4 coke in 2019 at the price of 1.50 and 2020 at the price of 2.5, and 2pepsi at the price of 6 in 2019 and 2020 at the price of 8. Calculate the inflation rate in 2020?

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more than 4 weeks ago
To calculate the inflation rate in 2020, we need to compare the prices of the same goods in 2019 and 2020.

For Coke:
Price in 2019 = \$1.50
Price in 2020 = \$2.50

Inflation rate for Coke = ((Price in 2020 - Price in 2019) / Price in 2019) * 100
= ((\$2.50 - \$1.50) / \$1.50) * 100
= (\$1 / \$1.50) * 100
= 66.67%

For Pepsi:
Price in 2019 = \$6
Price in 2020 = \$8

Inflation rate for Pepsi = ((Price in 2020 - Price in 2019) / Price in 2019) * 100
= ((\$8 - \$6) / \$6) * 100
= (\$2 / \$6) * 100
= 33.33%

Therefore, the overall inflation rate in 2020 is the average of the inflation rates for Coke and Pepsi:
Overall inflation rate = (66.67% + 33.33%) / 2
= 50%

So, the inflation rate in 2020 is 50%.
0
more than 4 weeks ago
Method 1: Using the Consumer Price Index (CPI)

The CPI is a measure of the average change in prices of a basket of goods and services purchased by consumers. To calculate the CPI in this case, we need to create a representative "basket" of goods, consisting of coke and pepsi:

| Item | 2019 Quantity | 2019 Price | 2019 Expenditure | 2020 Quantity | 2020 Price | 2020 Expenditure |
|---|---|---|---|---|---|
| Coke | 4 | 1.50 | 6 | 4 | 2.50 | 10 |
| Pepsi | 2 | 6 | 12 | 2 | 8 | 16 |
| Total | 6 | 18 | 6 | 18 |

CPI (2020) = (2020 Expenditure / 2019 Expenditure) x 100
CPI (2020) = (10 + 16) / (6 + 12) x 100
CPI (2020) = 111.11

The inflation rate is the percentage change in the CPI from one period to the next:

Inflation rate = (CPI 2020 - CPI 2019) / CPI 2019 x 100
Inflation rate = (111.11 - 100) / 100 x 100
Inflation rate = 11.11%

Method 2: Using the GDP Deflator

The GDP deflator is another measure of inflation that compares the GDP in current prices to the GDP in constant prices. In this case, we don't have GDP data, so we can't calculate the GDP deflator.

Therefore, the inflation rate using the CPI is 11.11%.
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