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    Calculating CPI

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    Use the hypothetical date in Table III to respond to the questions that follow.

    Table III: Relative Importance in the
    Basket of Goods and Services, 1995-2000.

    CATEGORY QO Po P1 PoQo P1Qo
    Food 16 50 50
    Clothing 5 10 15
    Housing 40 10 20
    Transportation 17 10 10
    Medical 6 5 10
    Education 5 10 15
    Recreation 6 10 15
    Other 5 10 15
    Total 100

    a. Calculate the CPI using the formula

    Pi Qo
    CPI = ________ X 100 =
    Po Qo

    b. Interpret/explain the meaning of this numerical value of the CPI. Be specific.

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    https://brainmass.com/economics/price-levels/calculating-cpi-283923

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    Solution:

    CATEGORY QO Po P1 Po*Qo P1*Qo
    Food 16 50 50 800 800
    Clothing 5 10 15 50 75
    Housing 40 10 20 ...

    Solution Summary

    Solution describes the steps to calculate CPI in the given case.

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