if the CPI of mythopia is 100, 112.1 and 120.8 for 2010, 2011 and 2012 respectively, between 2010 and 2012, the purchasing power of the consumer's myth is?

Answer 1

To determine the purchasing power of consumers from 2010 to 2012 in Mythopia using the Consumer Price Index (CPI) data provided, we need to observe how the CPI changes over that period. The CPI represents the level of prices and can help us assess the purchasing power of consumers.

CPI Data:

• 2010: 100.0
• 2011: 112.1
• 2012: 120.8

To assess the purchasing power, we need to compute the relative purchasing power each year based on the CPI. The purchasing power of money can be understood as inversely related to the CPI: a higher CPI indicates lower purchasing power.

1. Purchasing Power Calculation:

   • In 2010, the base year is set at 100 (i.e., purchasing power is 1.00).

   • In 2011, purchasing power can be calculated as:
     \[ \text{Purchasing Power in 2011} = \frac{\text{CPI in 2010}}{\text{CPI in 2011}} = \frac{100}{112.1} \approx 0.891 \]

   • In 2012, purchasing power can be calculated as:
     \[ \text{Purchasing Power in 2012} = \frac{\text{CPI in 2010}}{\text{CPI in 2012}} = \frac{100}{120.8} \approx 0.828 \]

2. Interpretation:

   • Purchasing power in 2010: 1.00 (baseline)
   • Purchasing power in 2011: ≈ 0.891
   • Purchasing power in 2012: ≈ 0.828

As you can see, the purchasing power has decreased from 1.00 in 2010 to approximately 0.828 in 2012. This means that between 2010 and 2012, the purchasing power of consumers in Mythopia has declined.

3. Percentage Change in Purchasing Power (from 2010 to 2012):
   • The percentage change can be calculated as:
     \[ \text{Percentage Change} = \left( \frac{\text{Purchasing Power in 2012} - \text{Purchasing Power in 2010}}{\text{Purchasing Power in 2010}} \right) \times 100 \] \[ = \left( \frac{0.828 - 1.00}{1.00} \right) \times 100 \approx -17.2% \]

Conclusion: The purchasing power of consumers in Mythopia decreased by approximately 17.2% from 2010 to 2012.