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Consider a good with base price of $ 100

𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 = 3 %
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑎𝑓𝑡𝑒𝑟 𝑖𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 = $ 100 ∗ 1.03 = $ 103
𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒 𝑑𝑢𝑒 𝑡𝑜 𝑎𝑝𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = $ 103 ∗ 1.05 = $ 108.15
108.15 − 100
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑓𝑜𝑟𝑖𝑒𝑔𝑛 𝑝𝑟𝑖𝑐𝑒 = ∗ 100 = 8.15 %
100

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