Final answer:
The overall CPI will increase by more than 5% but less than 10% due to the 10% increase in prescription drug prices and a 5% increase in other goods, which may not fully represent the cost of living change for senior citizens who spend more on prescription drugs.
Step-by-step explanation:
The CPI (Consumer Price Index) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. When the price of prescription drugs increases by 10% and the price of all other goods increases by 5%, the overall CPI will increase by a percentage that is dependent on the weighting of prescription drugs within the CPI basket.
Since senior citizens devote a higher fraction of their spending to prescription drugs, if the CPI weighting doesn't fully represent this, then the CPI will likely understate the change in senior citizens’ cost of living. The actual effect on CPI will be somewhere above 5% but not necessarily reaching 10%, depending on the overall weighting of all goods and services.
If senior citizens spend more on prescription drugs than the average consumer, a 10% increase in drug prices will have a more significant impact on their cost of living compared to the CPI, which is based on average spending habits.