If someone could help me with this question, that would really help. I'm just not sure what the formula would be?
Suppose a market basket of goods and services includes the goods for two successive years. According to the table, between the years 2012 and 2013, what was the percentage change in the consumer price index? Explain. (Remember to include the total cost of all goods purchased from each year.)
This is how the chart looks :
Good/Service | Quantity | 2012 Unit Price (Base Year) | 2013 Unit Price (Current Year)
Cola | 20 | $0.75 | $1.50
Blue Jeans | 3 | $36.00 | $42.00
Hamburgers | 14 | $1.00 | $2.50
Anonymous got it wrong I'm afraid. The inflation was 41 %.
Wee need to calculate the new CPI first, which should be around 141 (100/137 * 193 ). Since the first CPI (2012) is a base year, its value is 100. Therefore we could conclude that the inflation change was 41 %.
To find the percentage change in the consumer price index (CPI) between 2012 and 2013, we need to calculate the total cost of all goods purchased in each year and use the formula:
Percentage Change = ((New Value - Old Value) / Old Value) * 100
Let's calculate the total cost of all goods purchased for each year:
For 2012:
Total cost of Cola = Quantity * 2012 Unit Price = 20 * $0.75 = $15.00
Total cost of Blue Jeans = Quantity * 2012 Unit Price = 3 * $36.00 = $108.00
Total cost of Hamburgers = Quantity * 2012 Unit Price = 14 * $1.00 = $14.00
Total cost for 2012 = $15.00 + $108.00 + $14.00 = $137.00
For 2013:
Total cost of Cola = Quantity * 2013 Unit Price = 20 * $1.50 = $30.00
Total cost of Blue Jeans = Quantity * 2013 Unit Price = 3 * $42.00 = $126.00
Total cost of Hamburgers = Quantity * 2013 Unit Price = 14 * $2.50 = $35.00
Total cost for 2013 = $30.00 + $126.00 + $35.00 = $191.00
Now, let's calculate the percentage change:
Percentage Change = ((New Value - Old Value) / Old Value) * 100
= (($191.00 - $137.00) / $137.00) * 100
= ($54.00 / $137.00) * 100
= 0.394 * 100
≈ 39.4%
Therefore, the percentage change in the consumer price index between 2012 and 2013 is approximately 39.4%.
2012 COLA: 0.75*20 = $15
2012 BLUE JEANS: 36*3 = $108
2012 HAMBURGERS: 1*14 = $14
Price of 2012 (base year) basket = $137
2013 COLA: 1.5*20 = $30
2013 BLUE JEANS: 42*3 = $129
2013 HAMBURGERS: 2.5*14 = $35
Price of 2013 basket = $194
2013 CPI = (194/137) * 100 = 142
2012 CPI = 100, because 2012 is the base year.
Therefore the % change in the consumer price index is 42%
100(191/137)= 139.42
(54/137)100 = 39.42%