question archive Assume we have three commodities X, Y and Z with the following quantities and prices in 2019 (base year) and 2020 respectively
Subject:FinancePrice:2.86 Bought7
Assume we have three commodities X, Y and Z with the following quantities and prices in 2019 (base year) and 2020 respectively.
|
Year |
X |
Y |
Z |
|||
|
2019 |
Quantity |
Price |
Quantity |
Price |
Quantity |
Price |
|
100 |
$1.20 |
120 |
$2.10 |
180 |
$3.25 |
|
|
2020 |
$1.44 |
$2.23 |
$3.88 |
|||
Calculate the consumer price index in the year 2019
Consumer Price Index in 2019 (base year) :
= (Quantity of X)(Price of X) + (Quantity of Y)(Price of Y) + (Quantity of Z)(Price of Z)
(where, quantities and prices of all three are of 2019)
= (100 x $1.20) + (120 x $2.10) + (180 x $3.25)
= $120 + $252 + $585
= $957
Consumer price index in 2019 = $957
Calculate the CPI in year 2020.
= (Quantity of X)(Price of X) + (Quantity of Y)(Price of Y) + (Quantity of Z)(Price of Z)
(where, quantities are of base year 2019, and prices are of 2020.)
= (100 x $1.44) + (120 x $2.23) + (180 x $3.88)
= $144 + $267.60 + $698.40
= $1,110
Consumer price index in 2020 = $1,110
