The fixed basket of Econoland consists of 10 units of A, 20 units of B, and 30 units of C. Current prices are $1 per unit of A, $2 per unit of B, and $3 per unit of C. Base year prices are $1 for each unit of A, B, and C. What is the CPI in the current year?
A)43
B)100
C)233
D)430
E)140

Question

Quizplus · Accepted Answer

To calculate the CPI, we need to first calculate the cost of the fixed basket in the current year and the base year.

Cost in the current year = (10 x $1) + (20 x $2) + (30 x $3) = $10 + $40 + $90 = $140
Cost in the base year = (10 x $1) + (20 x $1) + (30 x $1) = $60

CPI = (Cost in the current year / Cost in the base year) x 100
CPI = ($140 / $60) x 100
CPI = 233.33

Round up to the nearest whole number gives us 233. Therefore, the answer is C.

The Fixed Basket of Econoland Consists of 10 Units of A