The consumer price index for Planet Econ consists of only two items: books and hamburgers. In 2015, the base year, the typical consumer purchased 10 books for $20 each and 200 hamburgers for $1 each. In 2017, the typical consumer purchased 12 books for $23 each and 300 hamburgers for $1.15 each. The consumer price index for 2017 on Planet Econ equals:
A)1.00
B)1.15
C)1.25
D)1.45

Question

Quizplus · Accepted Answer

First, note that in the computation of the CPI, the basket of goods and services is fixed - so the quantities remain the same as in the base year. The market basket cost in 2015 was (10 × $20)+ (200 × $1)= $400. The same market basket's cost in 2017 was (10 × $23)+ (200 × $1.15)= $460, so the consumer price index is 1.15.

The Consumer Price Index for Planet Econ Consists of Only