Use the information in the table below to calculate the CPI in the current year.

Product

Quantity in Market Basket

Unit Price in the Base Year

Unit Price in the Current Year

Bar of Soap

10

$1

$1

Big Mac

20

$2

$3

Pair of Socks

30

$3

$2

Question

Use the information in the table below to calculate the CPI in the current year.

Product

Quantity in Market Basket

Unit Price in the Base Year

Unit Price in the Current Year

Bar of Soap

10

$1

Big Mac

20

$2

$3

Pair of Socks

30

$3

$2

BlackTom AI · Accepted Answer

To tackle this problem, I’ll first restate the data we’re given and what the CPI calculation requires.
- The basket consists of: Bar of Soap, Big Mac, and Pair of Socks, with quantities 10, 20, and 30 respectively.
- Base year prices: Soap $1, Big Mac $2, Socks $3.
- Current year prices: Soap $1, Big Mac $3, Socks $2.

Next, I’ll compute the total cost of the basket in the base year.
- Soap: 10 × $1 = $10
- Big Mac: 20 × $2 = $40
- Socks: 30 × $3 = $90
- Total base year cost = $10 + $40 + $90 = $140

Then, I’ll compute the total cost of the same basket in the current year.
- Soap: 10 × $1 = $10
- Big Mac: 20 × $3 = $60
- Socks: 30 × $2 = $60
- Total current year cost = $10 + $60 + $60 = $130

Now I’ll calculate the CPI using the standard formula: CPI = (Current Year Cost / Base Year Cost) × 100.
- CPI = ($130 / $140) × 100 = 0.92857 × 100 ≈ 92.857...
- Rounding to the nearest whole number gives CPI ≈ 93.

Let’s evaluate the answer choices one by one:
- Option 1: CPI = 71. This is far from the computed 93; likely a miscalculation of either base or current year costs, or a misapplication of the formula.
- Option 2: CPI = 93. This matches the calculation above (approximately 92.857, rounded to 93). This appears correct based on the data given.
- Option 3: CPI = 108. This would occur if the current-year basket cost were much higher relative to the base year, which is not the case here since the current-year total cost ($130) is actually less than the base-year total cost ($140).
- Option 4: CPI = 140. This value would imply the current-year cost equals 140% of base year, which does not align with the computed ratio of 130/140.

In summary, the correct approach shows the base-year cost as $140, the current-year cost as $130, and the CPI as (130/140) × 100 ≈ 92.86, which rounds to 93. The other options reflect miscalculations or misinterpretations of the formula.

ECON 2002.01 SP2025 (25230) Quiz 5

Use the information in the table below to calculate the CPI in the current year. Product Quantity in Market Basket Unit Price in the Base Year Unit Price in the Current Year Bar of Soap 10 $1 $1 Big Mac 20 $2 $3 Pair of Socks 30 $3 $2

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