|
Year
|
Output
|
Price ($)
|
Consumer Price Index
|
Production Expenses($)
|
|
2010
|
70,000
|
3.20
|
1.10
|
120,000
|
|
2011
|
75,000
|
2.90
|
1.20
|
140,000
|
|
2012
|
80,000
|
2.80
|
1.15
|
135,000
|
Let the base year be 2011:
1. For the year 2010, determine the output index? Interpret this measure.
2. For the year 2012, what is the price index? Interpret this measure.
3. Suppose that the only source of income for this farmer is from the production of this output. Determine the best year in terms of real income for this farmer?