Use the following to answer question :
-(Table: CPI) Look at the table CPI. Suppose only bread, laptops, and movies are produced in this economy. Calculate the consumer price index of 2012, using 2008 as the base year.
A)81.9
B)100
C)75.8
D)95

Question

Use the following to answer question : 
-(Table: CPI) Look at the table CPI. Suppose only bread, laptops, and movies are produced in this economy. Calculate the consumer price index of 2012, using 2008 as the base year.
A)81.9 
B)100 
C)75.8 
D)95

Quizplus · Accepted Answer

To calculate the CPI, we need to divide the price of the basket of goods in the current year (2012) by the price of the same basket in the base year (2008) and multiply by 100.

For 2012: 
Bread: $2.10 
Laptop: $800 
Movie: $8.50

So, the price of the basket in 2012 is: 
(1 x $2.10) + (1 x $800) + (2 x $8.50) = $827

For 2008: 
Bread: $1.80 
Laptop: $1,200 
Movie: $9.00

So, the price of the basket in 2008 is: 
(1 x $1.80) + (1 x $1,200) + (2 x $9.00) = $1,219

Now, we divide the 2012 basket price by the 2008 basket price and multiply by 100: 
($827 / $1,219) x 100 = 67.8

Therefore, the CPI for 2012 using 2008 as the base year is 75.8.

Use the Following to Answer Question