Question

a. What is the total cost for a basket of goods that includes 210 gallons of gas, 55 pizzas, 40 6-packs, and 2 textbooks

Answer 1

• Total Cost Base year = $815
• Last year Total cost = $1,464.35

Step-by-step explanation:

In the base year, the total cost was:

= (210 * 1.30) + (55 * 3.60) + (40 * 3.90) + (2 * 94)

= 273 + 198 + 156 + 188

= $815

Last year, the total cost was:

= (210 * 1.60) + (55 * 7.65) + (40 * 6.64) + (2 * 221)

= 336 + 420.75 + 265.60 + 442

= $1,464.35

Notice that the total cost increased last year from the base year. This is the effect of inflation. Things get more expensive overtime.