Question

Suppose that the typical consumer basket consisted of 3 units of pork and 4 units of corn. In 2015, price of pork was $20 and price of corn was $12. In 2016, price of pork was $25 and price of corn was $18. What is the consumer price index for 2016 if the base year is 2015?

Answer 1

Answer:

136.11

Explanation:

Consumer price index = price of basket current year/ price of basket base year x 100

For 2015( 3units pork x $20 + 4 units corn x $12) = $108

For 2016( 3units pork x $25 + 4 units corn x $18) = $147

CPI = $147/$108 x 100

= 136.11

Answer 2

Answer:

CPI= 136.11

Explanation:

The price index is gotten by the following;

Consumer price index divided by price of basket current year price of basket base year and multiply by 100

We have as

For year 2015

3units pork x $20 + 4 units corn x $12

= $108

For for the year 2016

= 3units pork x $25 + 4 units corn x $18

= $147

CPI = $147/$108 x 100

CPI = 1.3611 × 100

CPI= 136.11

Our consumer price index is 136.11