solution

You are a purchasing agent. You always buy 1000 items from one source, namely 10 widgets and 990 doodads. In the past, widgets and doodads cost $1 each, so you paid $1000. Now the price of widgets has increased by 10% to $1.10, and the price of doodads has increased by 5% to $1.05. By how much has the total you pay increased? What percentage of $1000 is that increase? (This number is the percentage increase in the total paid.) Is it closer to 5% or to 10%? Explain how your answer to this third question is related to Simpson’s paradox.