The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2016, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2017, the price of pizzas went down to $8 each, while the prices of jeans and milk remained the same. Between 2016 and 2017, a typical family's cost of living:
A)increased by 4.5 percent.
B)decreased by 4.5 percent.
C)remained the same.
D)decreased by 20 percent.

Question

Quizplus · Accepted Answer

The market basket cost in 2016 was (10 × $10)+ (7 × $40)+ (20 × $3)= $440. The same market basket's cost in 2017 was (10 × $8)+ (7 × $40)+ (20 × $3)= $420, so the consumer price index is 0.955, or a decrease of 4.5 percent.

The Typical Family on the Planet Econ Consumes 10 Pizzas