Question

Last year you purchased 20 CDs at $12 a piece, 10 shirts at $15 each, and 5 sweaters at $30 each (total spending equals $540). This year you buy 18 CDs at $15 each, 10 shirts at $16 each, and 6 sweaters at $36 each (total spending equals $640). If last year's index was 100, this year's index

Answer 1

Ans:

This year's index = 118.5

Explanation

Index = (Cost of market basket in a given year / Cost of market basket in the base year) * 100

= ((20 * $15) + (10 * $16) +(5 * $36)) / ((20 * $12) + (10 * $15) +(5 * $30))

= ($300+ $160 + $180) / ($240 + $150 + $150)

= $640 / $540

= 118.5