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cloveb cloveb
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7 years ago
Suppose that the typical consumer buys one apple and one orange every month. In the base year 1986, the price for each was $1. In 1996, the price of apples rises to $2, and the price of oranges remains at $1. Assuming that the CPI for 1986 is equal to 1, the CPI for 1996 would be equal to

A. 1/2.
B. 1.
C. 3/2.
D. 2
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#1
Staff Member
7 years ago
 C. 3/2

The CPI measures the change in the price of the typical consumer’s basket of goods. Since the price of the basket was $2 in 1986, and it is $3 in 1996, the CPI for 1996 is equal to 3/2.
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