Economics

ECO 20250 Nagler

HOMEWORK #1

• Please answer all parts of all questions on a separate sheet for full credit. Show your work. • Please upload your completed homework to Blackboard by the due date/time.

1. Math Review! In the following equations, find the slope ((change in y / change in x)): a. y = 0.43x - 11 b. y = 4x + 8 - 2(5 - x) c. x = 0.221y - 8 (Note that the x and y changed places)

2. More Math Review! Solve the following equations for x:

a. x - 7 = 14 b. 27 - 4x = 7 c. x2 + 2x - 24 = 0

3. Over the past year the inflation has been 10%. The price of a used Ford SUV has fallen from

$6,000 to $5,000, or 16.6%. By what percentage has the real price fallen? 4. The following table shows the average retail price of butter and the Consumer Price Index

from 1980 to 2010, scaled so that the 𝐶𝑃𝐼 = 100 in 1980:

1980 1990 2000 2010 CPI 100 158.56 208.98 218.06 Retail price of butter (salted, grade AA, per lb.)

$1.88 $1.99 $2.52 $2.88

a. Calculate the real price of butter in 1980 dollars. Has the real price

increased/decreased/stayed the same from 1980 to 2000? From 1980 to 2010? b. What is the percentage change in the real price (1980 dollars) from 1980 to 2000?

From 1980 to 2010? c. Convert the CPI into 1990 = 100 and determine the real price of butter in 1990

dollars.