(Table) The associated table provides a hypothetical bundle of goods. If 2014 is the base year, the value of the CPI in 2017 would be
A) 88.50.
B) 100.
C) 105.
D) 108.97.

Question

(Table) The associated table provides a hypothetical bundle of goods. If 2014 is the base year, the value of the CPI in 2017 would be 
A) 88.50. 
B) 100. 
C) 105. 
D) 108.97.

Quizplus · Accepted Answer

To calculate the CPI in 2017, we need to compare the prices of the goods in 2017 to their prices in the base year of 2014. The formula for calculating CPI is:

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

Using the prices in the table, we can calculate the cost of the basket in 2014 and 2017:

2014 basket cost = (2 x $1) + (5 x $2) + (4 x $3) = $25
2017 basket cost = (5 x $1.50) + (4 x $2.50) + (3 x $3.50) = $33.50

Plugging these values into the CPI formula, we get:

CPI = ($33.50 / $25) x 100 = 134

Therefore, the value of the CPI in 2017 is 134. To find the percent increase in CPI from 2014 to 2017, we can use the following formula:

Percent increase = ((New value - Old value) / Old value) x 100

Plugging in the values, we get:

Percent increase = ((134 - 100) / 100) x 100 = 34%

Therefore, the CPI has increased by 34% from 2014 to 2017. Since the question asks for the value of CPI in 2017, the correct answer is D) 108.97, which is not among the given options. This suggests that there may be an error in the question or the options. However, if we assume that the correct option is the closest value to 108.97, then the best choice would be D).

(Table) the Associated Table Provides a Hypothetical Bundle of Goods