Table 9-11

-Refer to Table 9-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2013 is the base year,then what is the CPI for 2018?
A)40.08
B)100
C)180
D)208

Question

Table 9-11
 
-Refer to Table 9-11.Suppose an economy has only three goods and the typical family purchases the amounts given in the table above.If 2013 is the base year,then what is the CPI for 2018?
A)40.08 
B)100 
C)180 
D)208

Quizplus · Accepted Answer

To calculate CPI, we need to follow these steps:

1. Calculate the cost of the basket of goods for the base year (2013):
Cost in 2013 = ($1 x 100) + ($2 x 50) + ($3 x 25) = $200

2. Calculate the cost of the basket of goods for the current year (2018):
Cost in 2018 = ($2 x 100) + ($3 x 50) + ($4 x 25) = $275

3. Calculate CPI using the formula:
CPI = (Cost of basket in current year / Cost of basket in base year) x 100

CPI = ($275 / $200) x 100 = 137.5

Therefore, the CPI for 2018 would be 208 (not one of the given answer choices).

Table 9-11 -Refer to Table 9-11.Suppose an Economy Has Only Three Goods