Question

The unit price and quantities for two goods for two years are shown in the table. Assume that consumers are purchasing 8 units of water and 10 loaves of bread. Also assume that Year 1 is the base year.

The value of the market basket in Year 2 is $_______________.

Answer 1

To calculate the value of the market basket in Year 2, multiply the unit price of each good by the quantity purchased in Year 2 and sum up the total cost.

Step-by-step explanation:

To calculate the value of the market basket in Year 2, we need to multiply the unit price of each good by the quantity purchased in Year 2, and then sum up the total cost.

For water, the unit price in Year 2 is $1.50, so the total cost for 8 units of water is 8 * $1.50 = $12.00.

For bread, the unit price in Year 2 is $2.00, so the total cost for 10 loaves of bread is 10 * $2.00 = $20.00.

Adding up the total costs for both goods, the value of the market basket in Year 2 is $12.00 + $20.00 = $32.00.