Table 24-2
The following table pertains to Wiskancia, an economy in which the typical consumer's basket consists of 15 pounds of apples and 7 teddy bears.

$$\begin{array} { | c | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Price of Apples } \
\text { (Dollars per pound) }
\end{array} & \begin{array} { c }
\text { Price of Teddy bears } \
\text { (Dollars per toy) }
\end{array} \
\hline 1 & 14 & 7 \
\hline 2 & 12 & 5 \
\hline 3 & 15 & 9 \
\hline
\end{array}$$
-Refer to Table 24-2. If the base year is Year 1, then the CPI in Year 3 was
A)120.5.
B)-111.2.
C)74.7.
D)111.2.

Question

Table 24-2
The following table pertains to Wiskancia, an economy in which the typical consumer's basket consists of 15 pounds of apples and 7 teddy bears.
​
​
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Price of Apples } \
\text { (Dollars per pound) }
\end{array} & \begin{array} { c } 
\text { Price of Teddy bears } \
\text { (Dollars per toy) }
\end{array} \
\hline 1 & 14 & 7 \
\hline 2 & 12 & 5 \
\hline 3 & 15 & 9 \
\hline
\end{array}$$
-Refer to Table 24-2. If the base year is Year 1, then the CPI in Year 3 was
A)120.5.
B)-111.2.
C)74.7.
D)111.2.

Quizplus · Accepted Answer

To calculate the Consumer Price Index (CPI) for Year 3 using Year 1 as the base year, we first calculate the total cost of the consumer's basket in both years. In Year 1 (the base year), the cost is (15 pounds of apples * $14/pound) + (7 teddy bears * $7/toy) = $210 + $49 = $259. In Year 3, the cost is (15 pounds of apples * $15/pound) + (7 teddy bears * $9/toy) = $225 + $63 = $288. The CPI for Year 3 is then calculated as ($288 / $259) * 100 = 111.2.

Table 24-2 the Following Table Pertains to Wiskancia, an Economy

Table 24-2
the Following Table Pertains to Wiskancia, an Economy