In a hypothetical economy, a market basket consists of one laptop and two DVD players. In the base year, 2010, the price of a DVD player was $200, and the price of a laptop was $500. In 2015, the price of a DVD player was $380, and the price of a laptop was $750. The CPI for 2010 was

Question

Quizplus · Accepted Answer

To calculate the CPI, we use the following formula:

CPI = (Cost of market basket in specific year/Cost of market basket in base year) x 100

In 2010, the cost of the market basket was:

1 laptop x $500 + 2 DVD players x $200 = $900

In 2015, the cost of the same market basket was:

1 laptop x $750 + 2 DVD players x $380 = $1510

Using the formula for CPI, we get:

CPI = ($1510/$900) x 100 = 167.78

Rounding off to two decimal places, the CPI for 2010 is 1.68. Therefore, the answer is D.

In a Hypothetical Economy, a Market Basket Consists of One