In a hypothetical economy,a market basket consists of one stereo and two TVs.In the base year,2005,the price of a TV was $200,and the price of a stereo was $500.In 2010,the price of a TV was $380,and the price of a stereo was $750.The CPI for 2010 was

Question

Quizplus · Accepted Answer

To calculate the CPI, we first need to find the cost of the market basket in both the base year and the current year:

- Base year (2005): (2 x $200) + $500 = $900
- Current year (2010): (2 x $380) + $750 = $1510

Then, we can use the following formula to calculate the CPI:

CPI = (Cost of market basket in current year / Cost of market basket in base year) x 100

CPI = ($1510 / $900) x 100 = 167.78

Therefore, the CPI for 2010 is 1.68.

In a Hypothetical Economy,a Market Basket Consists of One Stereo