Activity (Measuring the Cost of Living)

Problem 1: The typical Filipino household buys 7 kilos of rice, 2 kilos of pork,
and 4 pieces of eggs each week. The prices of these commodities in years 2019,
2020, and 2021 were given in the table below:
YEAR Price per kilo of Price per kilo of Price per piece of
rice pork egg
2019 P38 P250 P5
2020 P42 P380 P6
2021 P45 P400 P7

Required:
a. Compute for the CPI in 2020, using 2019 as the base year.
b. Compute for the CPI in 2021, using 2019 as the base year.
c. Calculate the rate of inflation between 2019 and 2020.
d. Calculate the rate of inflation between 2020 and 2021.
Problem 2: The salary of an audit associate in 2019 is P18,000 per month.
Consumer Price indexes for the year 2019 and 2020 are 100 and 120
respectively. How much is the ideal salary of the audit associate in 2020?
Problem 3: The parents of Marga and Cassie are deciding on how much
allowance should they gave their daughter Cassie who is about to enter college
for the year 2021. Marga, the older sister was given an allowance of P500 a day
when she started college in 2017.
In 2017, the fare was P7, and in 2021, the fare is P10. Using fair as the index
or price level, how much allowance should be given to Cassie considering that
her parents want to give the at least the same level of allowance that they gave
to Marga?
Problem 4: As the economic consultant of the labor group Kilusang Mayo Uno,
you were tasked to monitor the condition of the minimum wage (if it still could
meet at least the essential needs of the workers).
The minimum wage in 2021 is P537 per day. Price indexes for the year 2021
and 2022 are P117 and P120 respectively. Based on the computation that you
will present to the organization, how much is the ideal minimum wage in
2022?
Problem 5: If Juan has P20,000 earning 5% interest, which of the following
given years will she be wealthier? The inflation rate in year 1 is 5%; in year 2, it
is 10%; and in year 3, it is 2%.

Required:
a. Compute for the real rate in each year.
b. Answer the given question: “which of the following given years will she be
wealthier?”