Table 20-11

-Refer to Table 20-11. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2005 is the base year, then what is the CPI for 2013?
A) 40.08
B) 100
C) 180
D) 208

Question

Table 20-11
 
-Refer to Table 20-11. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2005 is the base year, then what is the CPI for 2013?
A) 40.08 
B) 100 
C) 180 
D) 208

Quizplus · Accepted Answer

To calculate the CPI for 2013, we need to do the following steps:
1. Calculate the "market basket" for each year. This is the total cost of the goods that the typical family purchases.
- In 2005, the market basket is 2(10) + 3(20) + 4(30) = 200
- In 2013, the market basket is 3(15) + 4(25) + 5(35) = 455
2. Calculate the CPI for 2013 using the formula (market basket in year 2 / market basket in year 1) x 100.
- CPI for 2013 = (455 / 200) x 100 = 227.5
Therefore, the closest answer is 208 (D).

Table 20-11 -Refer to Table 20-11. Suppose an Economy Has Only Three