Question

10 The table below lists the prices from last year and the base year for a college-related basket of goods. Basket of College-Related Goods points Price Last Year (dollars) $2.9e Bock Price Base Year Basket of Goods (dollars) Gasoline (per gallon) $ 2.50 Pizza (per pizza) 5.50 Beer (per 6-pack) 4.40 Textbook (per book) es.ee Instructions: Round your answers to two decimal places 3.75 Reference a. What is the total cost for a basket of goods that includes 210 gallons of gas, 55 pizzas, 40 6-packs, and 3 textbooks? In the base year: $0 Last years b. Using this basket of goods, compute the following CPI values: In the base year Last year: C. Assume that rather than buying textbooks for their courses last year, all students decided to buy online access cards at $95 per textbook Compute the total cost for this basket of goods and the CPI Total cost of basket CPLC

Answer 1

A.

Cost of the basket

Base year =(210*2.50)+(55*5.50)+(40*4.40)+(3*100)

=525+302.5+176+300

=1303.5

Last year =(200*2.90)+(55*8.75)+(40*7.28)+(3*237)

=580+481.25+291.2+711

=2063.45

B.CPI values

CPI = (price of basket of goods /price of basket in base year)*100

Base year =(1303.5/1303.5)*100

=100

NOTE : always base year cpi is 100.

Last year=(2063.45/1303.5)*100

=158.30

C.

Total cost of basket for last year

=(200*2.90)+(55*8.75)+(40*7.28)+(3*95)

=580+481.25+291.2+285

=1637.45

CPI =(1637.45/1303.5)*100

=125.62