The data in the table above shows the consumption by families in a small (poor)
ID: 1173831 • Letter: T
Question
The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2005. The cost of the CPI market basket in 2005 is
A) $1.50.
B) $2.50.
C) $40.50.
D) $12.00
E) 100.
The families consume only salt and bread. The reference base period is 2005. The cost of the CPI market basket in 2006 is
A) $3.10.
B) $43.00.
C) $40.50.
D) $4.10.
E) unable to be calculated because information is needed about the quantities purchased in 2006.
The families consume only salt and bread. The reference base period is 2005. The CPI in 2005 is
A) 100.
B) 94.2.
C) 106.2.
D) 124.
E) 140.5.
The families consume only salt and bread. The reference base period is 2005. The CPI in 2006 is
A) 100.
B) 94.2.
C) 106.2.
D) 124.
E) 144.
Item(2005) Salt Bread QuantityPrice Price (2005)(2006) $0.50$1.00 $2.00 $210 20Explanation / Answer
The cost of basket in 2005 will be = 1*0.5+20*2 = 40.50
The cost of basket in 2006 will be = 1*1+20*2.1 = 43.00
The families consume only salt and bread. The reference base period is 2005. The CPI in 2005 is 100. The CPI for base year is always 100.
The families consume only salt and bread. The reference base period is 2005. The CPI in 2006 is = Exp in 2006/Exp in 2005*100 = 43/40.5*100 = 106.173 or 106.2
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