Question

Assume that apples cost 0.5 in 2002 and 1 in 2009, were as oranges cost 1 in 2002 and 0.5 in 2009. If 10 apples amd 5 oranges were purchased in 2002 , and 5 apples and 10 oranges were purchased in 2009, the CPI for 20009, using 2002 as the base year is?

Answer 1

CPI = 100%

Explanation:

in 2002:

apples cost .5

oranges cost 1

in 2009:

apples cost 1

oranges cost .5

purchase in 2002:

10 apples and 5 oranges = 10 * .5 + 5 * 1

=5 + 5 = 10

purchase in 2009:

5 apples and 10 oranges = 5 * 1 + 10 * .5

= 5 + 5 = 10

Consumer Price Index (CPI) for 2009 using 2002 as the base year is,

CPI = Ct/Co * 100

where Ct = cost in current year,

Co = cost in base year

thus, CPI = 10/10 * 100

= 100%