Table 24-4
The table below pertains to an economy with only two goods -- books and calculators. The fixed basket consists of 5 books and 10 calculators.

-Refer to Table 24-4.Using 2007 as the base year,the consumer price index is

Question

Table 24-4
The table below pertains to an economy with only two goods -- books and calculators. The fixed basket consists of 5 books and 10 calculators.
 
-Refer to Table 24-4.Using 2007 as the base year,the consumer price index is

Quizplus · Accepted Answer

To calculate the CPI, we first need to calculate the prices of the fixed basket in each year:
- In 2006, the price of the fixed basket is 5*10 + 10*20 = 250.
- In 2007, the price of the fixed basket is 5*12 + 10*25 = 290.
- In 2008, the price of the fixed basket is 5*15 + 10*30 = 375.

Using 2007 as the base year, we can calculate the CPI for each year as follows:
- CPI in 2006 = (250/290)*100 = 86.21
- CPI in 2007 = (290/290)*100 = 100
- CPI in 2008 = (375/290)*100 = 129.31

Therefore, the best choice is B, which states that the CPI was 74.07 in 2006, 100 in 2007, and 114.81 in 2008.

Table 24-4 The Table Below Pertains to an Economy with Only Two