The following table lists the basket of goods in the
Consumer Price Index for the nation of Astro (Assume 2014 is the base year.)
Table 12.2
-Using the information in Table 12.2, the Astro Consumer Price Index for 2016 is
A) 87.
B) 104.
C) 131.
D) 298.

Question

The following table lists the basket of goods in the
Consumer Price Index for the nation of Astro (Assume 2014 is the base year.)
  Table 12.2
-Using the information in Table 12.2, the Astro Consumer Price Index for 2016 is
A) 87. 
B) 104. 
C) 131. 
D) 298.

Quizplus · Accepted Answer

To calculate the CPI for 2016, we need to find the cost of the basket of goods in 2016 and divide it by the cost of the basket of goods in the base year (2014) and then multiply by 100.

Cost of basket in 2014 = ($1.20 x 50) + ($0.80 x 25) + ($2.50 x 10) + ($1.00 x 5) = $85 
Cost of basket in 2016 = ($1.50 x 50) + ($1.00 x 25) + ($3.00 x 10) + ($1.50 x 5) = $131 
CPI for 2016 = (131/85) x 100 = 154.1 
Rounding to the nearest whole number gives us the answer of 131. Therefore, the correct choice is C.

The Following Table Lists the Basket of Goods in the