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Math Help - Econ pratice Question Help??!! please

  1. #1
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    Econ pratice Question Help??!! please

    Hello All im stuck on this question below, i just do not know what formula to use to figure out the the IR for the increase.

    Table 24-6. The table below applies to an economy with only two goods &; hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
    Year Price of hamburgers Price of hot dogs
    2009 $5.00 $3.00
    2010 5.50 3.30
    2011 5.61 3.63
    Refer to Table 24-6. Which of the following scenarios is consistent with this statement? "The rate of inflation was 23.75 percent for 2011."
    a. The price of a hot dog was $2.44 rather than $3.30 in 2010, with other prices in the table remaining fixed.
    b. The price of a hamburger was $3.80 rather than $5.50 in 2010, with other prices in the table remaining fixed.
    c. The price of a hot dog was $4.22 rather than $3.63 in 2011, with other prices in the table remaining fixed..
    d. The price of a hamburger was $6.60 rather than $5.61 in 2011, with other prices in the table remaining fixed.

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  2. #2
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    Re: Econ pratice Question Help??!! please

    Do you not know what "The rate of inflation was 23.75 percent for 2011." means? If you do, then just assume each of the "scenarios" and do the calculation to see if it fits. If "the price of a hot dog was $2.44 rather than $3.30 in 2010, with other prices in the table remaining fixed" then, at 23.75 percent interest, theprice in 2011 would be (2.44)(1.02375)= 2.50 NOT $3.63 which it would have to be to have "with other prices in the table remaining fixed".
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  3. #3
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    Re: Econ pratice Question Help??!! please

    where did you get the 1.02375 from??
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  4. #4
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    Re: Econ pratice Question Help??!! please

    I,m I supposed to Multiply? 23.75% each years price then?
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