Consider an economy that produces only two goods: guitars and banjos. In 2010, 50 guitars and 25 banjos were produced. In 2011, 100 guitars and 50 banjos were produced. In 2012, 150 guitars and 75 banjos were produced. The price of a guitar was $300 in 2010, $400 in 2011, and $600 in 2012. The price of a banjo was $200 in 2010, $250 in 2011, and $300 in 2012. Suppose that the results of a survey of consumers indicates that the average consumer buys a basket of 2 guitars and 1 banjo. Still using 2010 as the base year, how much inflation took place between 2011 and 2012?
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