Question

Suppose the market basket consists of 400X, 150Y, and 220Z. Current-year prices are $1.50 for each unit of X, $0.50 for each unit of Y, and $4.60 for each unit of Z. Base-year prices are $1.00 for each unit of X, Y, and Z. Approximately what is the value of the CPI in the current year?

Answer 1

219.09

Step-by-step explanation:

Product Quantity ( Weight ) Base-year price Current-year price

X 400 1.00 1.50

Y 150 1.00 0.50

Z 220 1.00 4.60

CPI = Cost of market basket in Current Period x 100

Cost of market basket in Base Period

CPI = 400 * 1.50 + 150 * 0.50 + 220 * 4.60 x 100

400 * 1.00 + 150 * 1.00 + 220 * 1.00

CPI = 1,687.00 x 100

770.00

CPI = 2.19 x 100

CPI = 219.09