A market basket is made up of three goods,10X,12Y,and 18Z.The prices in the base year are $1.20,$2.10,and $3.25,respectively.The prices in the current year are $1.44,$2.23,and $3.88.What is the approximate consumer price index in the current year?

Question

Quizplus · Accepted Answer

To calculate the consumer price index (CPI), we use the following formula:
CPI = (Total cost of market basket in current year/Total cost of market basket in base year) x 100

Total cost of market basket in base year = (10 x $1.20) + (12 x $2.10) + (18 x $3.25) = $91.80
Total cost of market basket in current year = (10 x $1.44) + (12 x $2.23) + (18 x $3.88) = $120.60

CPI = ($120.60/$91.80) x 100 = 131.6 (rounded to one decimal place)

Therefore, the approximate CPI in the current year is 116.

A Market Basket Is Made Up of Three Goods,10X,12Y,and 18Z