Question

Indicate the most useful scenario to use for each of these market baskets. Consumer Price Index: Examining price changes that might affect businesses. Measuring the cost of living for a typical consumer. Measuring differences in the cost of living between different cities. Producer Price Index: Measuring the cost of living for a typical consumer. Measuring differences in the cost of living between different cities. Examining price changes that might affect businesses. Home Price Index: Measuring the cost of living for a typical consumer. Measuring differences in the cost of living between different cities. Examining price changes that might affect businesses.

Answer 1

Consumer Price Index - Measuring the cost of living for a typical consumer.

The CPI is a measure of the change in price of a basket of goods and services most commonly bought by an average customer.

Producer Price Index - Examining price changes that might affect businesses.

The Producer Price Index measures the change in prices for raw materials that are used in the production process. This is an important price index to measure the costs associated with running a business in a specific area.

Home Price Index - Measuring differences in the cost of living between different cities.

The Home Price Index measures the changes in the price of residential units in different areas. This index is useful to measure the cost of living accross cities because the cost of renting and buying real estate is often the most significant cost of living for any city.