the prices of consumer goods do not always exactly follow the cpi. the following chart shows several consumer items, along with their respective prices in 1983 and today.

using the prices shown on this chart, which of the following is a reasonable estimate of the current cpi?
a. 208
b. 195
c. 180
d. 173

Question

the prices of consumer goods do not always exactly follow the cpi. the following chart shows several consumer items, along with their respective prices in 1983 and today.

using the prices shown on this chart, which of the following is a reasonable estimate of the current cpi?
a. 208
b. 195
c. 180
d. 173

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Consumer Price Index", "Table Reading" ], "new_concepts": [], "current_concepts": [ "Consumer Price Index", "Table Reading", "Inflation Adjustment" ] } ## Read data from the table Using the **Table Reading** knowledge point $$ \begin{aligned} &\text{Pair of boots: } 1983 = \$67.45, \text{ Current} = \$126.85\ &\text{Hair dryer: } 1983 = \$15.25, \text{ Current} = \$29.95\ &\text{Box of tissues: } 1983 = \$1.15, \text{ Current} = \$2.25\ &\text{Toaster: } 1983 = \$22.85, \text{ Current} = \$44.25 \end{aligned} $$ ## Calculate total basket costs Using the **Consumer Price Index** knowledge point $$ \begin{aligned} &\text{Cost in 1983} = 67.45 + 15.25 + 1.15 + 22.85 = 106.70\ &\text{Current Cost} = 126.85 + 29.95 + 2.25 + 44.25 = 203.30 \end{aligned} $$ ## Calculate the current CPI Using the **Consumer Price Index** knowledge point $$ \begin{aligned} &\text{Base Year (1983) CPI} = 100\ &\text{Current CPI} = \frac{\text{Current Cost}}{\text{Cost in 1983}} \times 100 = \frac{203.30}{106.70} \times 100 \approx 190.53 \end{aligned} $$ ## Identify the closest estimate Comparing the calculated value $190.53$ to the given options: - a. 208 - b. 195 - c. 180 - d. 173 The closest reasonable estimate is 195.

a. 208

b. 195

c. 180

d. 173

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Macroeconomics", "Consumer Price Index" ] }

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QUESTION IMAGE

Question

Explanation:

Read data from the table

Calculate total basket costs

Calculate the current CPI

Identify the closest estimate

Answer: