Answer the following questions about the CPPI (Couch Potato Price Index)

2014                                                  2015

Good             Q          P                                         Q         P

Beer              4         $5.00                                     3         $6.00

Chips            8         $2.00                                     8         $2.50

Cable TV      1         $36.00                                  2         $32.00

Soda Pop     2         $2.00                                     1         $2.25

Pizza             5         $11.00                                  3         $16.00

a) Calculate the inflation rate based on this index, using 2014 as the base year Give answer as a % and round to 2 decimal places. (2 points)

d) Explain why, based on the figures above, why the inflation figure you calculated in (a) may overstate the impact of higher prices on the consumer. (Not just a generic answer here, be specific from this data) (1 point)

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