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 2011 is the base year,then what is the CPI for 2016?
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 2011 is the base year,then what is the CPI for 2016?
A)40.08 
B)100 
C)180 
D)208

Quizplus · Accepted Answer

To calculate CPI, we need to follow these steps:
1. Select a base year and assign its prices the value of 100.
2. Calculate the market value for each year by multiplying the quantity of each good with its respective price.
3. Add all market values to get the total market value for each year.
4. Divide the total market value for each year by the total market value for the base year and multiply by 100 to get the CPI.

Using the given data, we can calculate the CPI for 2016 as follows:

Market value in 2011 = (5 × 1) + (3 × 2) + (8 × 3) = 29
Market value in 2016 = (4 × 4) + (4 × 3) + (8 × 2) = 40
CPI for 2016 = (40 / 29) × 100 = 137.93

So, the correct answer is D) 208.

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