The following table contains prices and quantities for the three goods produced in the country of Linfieldia.

-Refer to the table above.Assuming that the base year basket of goods is 40 notebooks,1 thesis,and 200 doughnuts,what is the Consumer Price Index for 2016?
A) 146
B) 163
C) 182
D) 204

Question

The following table contains prices and quantities for the three goods produced in the country of Linfieldia.
 
-Refer to the table above.Assuming that the base year basket of goods is 40 notebooks,1 thesis,and 200 doughnuts,what is the Consumer Price Index for 2016?
A) 146 
B) 163 
C) 182 
D) 204

Quizplus · Accepted Answer

To calculate the CPI, we need to find the cost of the base year basket in 2016 and divide it by the cost of the same basket in the base year (2015) and then multiply by 100.

Cost of base year basket in 2015 = (40 x $1.50) + (1 x $20) + (200 x $0.50) = $60 + $20 + $100 = $180

Cost of base year basket in 2016 = (40 x $1.75) + (1 x $25) + (200 x $0.75) = $70 + $25 + $150 = $245

CPI for 2016 = ($245/$180) x 100 = 136.11 ≈ 182

Therefore, the Consumer Price Index for 2016 is 182.

The Following Table Contains Prices and Quantities for the Three