Question 1 In 2019 and in 2021, consumers bought only books and pens, and the table shows the data. 2019 2021 Item Price Quantity Price Quantity Books $2 7 $6 6 Pens $6 4 $8 8 The reference base period is 2019, and 2019 is also the year of the Consum Expenditure Survey. Calculate the CPI in 2021.

Question 1 In 2019 and in 2021, consumers bought only books and pens, and the table shows the data. 2019 2021 Item Price Quantity Price Quantity Books $2 7 $6 6 Pens $6 4 $8 8 The reference base period is 2019, and 2019 is also the year of the Consum Expenditure Survey. Calculate the CPI in 2021.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The CPI in 2021 equals _______.

51.4

100.0

74.0

194.7

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Question 1
In 2019 and in 2021, consumers bought only books and pens, and the table
shows the data.
2019
2021
Item Price Quantity Price Quantity
Books $2
7
6
Pens $6
4
8
$6
$8
The reference base period is 2019, and 2019 is also the year of the Consumer
Expenditure Survey.
Calculate the CPI in 2021.

Expert Solution

Step 1

CPI refers to Consumer Price Index. CPI measures the total cost of goods and services purchased by a typical urban consumer. The goods and services are part of market basket representing typical consumer goods. CPI plays an important role in determining inflation rate.

CPI of current year = Cost of market basket in the current year / Cost of market basket in base year * 100

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