Table 6-6. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.

-Refer to Table 6-6. If the base year is 2009, then the consumer price index is

Question

Table 6-6. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
 
-Refer to Table 6-6. If the base year is 2009, then the consumer price index is

Quizplus · Accepted Answer

To calculate the consumer price index (CPI), we need to calculate the cost of the fixed basket of goods in each year. In the base year (2009), the cost of the basket is $32 ($8 per hot dog x 8 hot dogs + $4 per hamburger x 4 hamburgers). 
In 2010, the cost of the basket is $35.20 ($8.80 per hot dog x 8 hot dogs + $4.40 per hamburger x 4 hamburgers). 
CPI for 2010 = (35.20/32) x 100 = 110 
In 2011, the cost of the basket is $37.68 ($9.42 per hot dog x 8 hot dogs + $4.71 per hamburger x 4 hamburgers). 
CPI for 2011 = (37.68/32) x 100 = 117 
Therefore, the correct answer is B.

Table 6-6 the Table Below Applies to an Economy with Only