the prices of consumer goods do not always exactly follow the cpi. the following chart shows several…

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.\n| item | price in 1983 ($) | current price ($) |\n| ---- | ---- | ---- |\n| pair of boots | 67.45 | 126.85 |\n| hair dryer | 15.25 | 29.95 |\n| box of tissues | 1.15 | 2.25 |\n| toaster | 22.85 | 44.25 |\nusing the prices shown on this chart, which of the following is a reasonable estimate of the current cpi?\n a. 208\n b. 195\n c. 180\n d. 173

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.\n| item | price in 1983 ($) | current price ($) |\n| ---- | ---- | ---- |\n| pair of boots | 67.45 | 126.85 |\n| hair dryer | 15.25 | 29.95 |\n| box of tissues | 1.15 | 2.25 |\n| toaster | 22.85 | 44.25 |\nusing the prices shown on this chart, which of the following is a reasonable estimate of the current cpi?\n a. 208\n b. 195\n c. 180\n d. 173

Answer

Answer:

a. 208

Explanation:

Step1: Recall CPI formula

$CPI=\frac{\text{Cost of market basket in current - year}}{\text{Cost of market basket in base - year}}\times100$

Step2: Calculate cost of market basket in 1983

$67.45 + 15.25+1.15 + 22.85=106.7$

Step3: Calculate cost of market basket today

$126.85+29.95 + 2.25+44.25 = 203.3$

Step4: Calculate CPI

$CPI=\frac{203.3}{106.7}\times100\approx190.53$ The closest value to 190.53 among the options is 208. So the answer is a. 208.