The consumer price index for Macroland consists of only two items: pizzas and soft drinks.In 2011,the base year,the typical consumer purchased 10 pizzas for $5 each and 25 soft drinks for $2 each.In 2012,the typical consumer purchased 15 pizzas for $8 each and 30 soft drinks for $3 each.The consumer price index for 2012 on Macroland equals
A) 100.
B) 108.
C) 115.
D) 135.
E) 155.

Question

Quizplus · Accepted Answer

To calculate the consumer price index (CPI) for 2012, we first find the cost of the basket in the base year (2011) and in 2012. In 2011, the cost is (10 pizzas * $5) + (25 soft drinks * $2) = $50 + $50 = $100. In 2012, the cost is (15 pizzas * $8) + (30 soft drinks * $3) = $120 + $90 = $210. The CPI for 2012 is (Cost in 2012 / Cost in 2011) * 100 = ($210 / $100) * 100 = 210, which is 210% of the base year, indicating an increase of 110% over the base year, so the CPI is 210. However, the choices provided do not match this calculation, suggesting a possible error in the question or choices.

The Consumer Price Index for Macroland Consists of Only Two