Question

Select the correct answer.
A basket of goods and services is used to calculate CPI. Assume that the basket contains 5 toothbrushes and 2 tubes of toothpaste. The prices
for those goods are shown in the table.
Year Toothbrush Tube of Toothpaste
year 1 $1.00 each $2.00 each
year 2 $1.25 each $2.10 each
What will the CPI for year 2 be?
CA 9.00
B. 10.45
C. 86.00
D. 116.11

Answer 1

Answer:

B. $\ 10.45$

Step-by-step explanation:

CPI stands for Consumer Price Index, which is the measure of average prices to goods and services.

So, in this case, we have to find the average price for the given basket in year 2.

We know that in year 2, a toothbrush tube costs $1.25 and a tube of toothpaste costs $2.10. If we have 5 toothbrushes and 2 tubes of toothpaste, the total cost would be

$5 \ toothbrushes=5(\ 1.25)=\ 6.25\\2 \ toothpaste \ tubes=2(\ 2.10)=\ 4.20$

Now, the CPI would be the sum of these costs

$CPI = \ 6.25 + \ 4.20=\ 10.45$

Therefore, the Consume Price Index for this basket of goods is

B. $\ 10.45$

Answer 2

Answer:

D

Step-by-step explanation:

To calculate CPI, or Consumer Price Index, add together a sampling of product prices from a previous year. Then, add together the current prices of the same products. Divide the total of current prices by the old prices, then multiply the result by 100.

Year 1 = $9

Year 2 = $10.45

$10.45 divided by $9.00 = 1.6111

1.61 x 100 = 116.11