In Bovania,cattle compose 48% of the consumer price index (CPI),housing composes 32%,and entertainment accounts for the remaining 20%.If,in a certain year,the price of cattle rises by 30% and the price of housing rises by 25%,then:
A) the value of the CPI must rise, no matter what happens to the price of entertainment, because two-thirds of the CPI is more expensive.
B) the CPI has increased as long as the price of entertainment does not fall by more than 55%.
C) the CPI has increased, even if the entertainment in the next year is free.
D) the CPI has decreased if the price of entertainment falls by more than 27.5%.
E) it is not possible to tell what would happen to the CPI because it is certain that the goods included in the CPI must change.

Question

Quizplus · Accepted Answer

The increase in cattle prices (30% of 48%) contributes to a 14.4% increase in the CPI and the increase in housing prices (25% of 32%) contributes to an 8% increase in the CPI. Therefore, the total increase in CPI is 22.4%. Even if the entertainment in the next year is free (0% increase), the CPI has still increased by 22.4%. So, option C is the correct answer.

In Bovania,cattle Compose 48% of the Consumer Price Index (CPI),housing