Using the Table Below, Compute the Consumer Price Index CPI)

question 7

Essay

Using the table below, compute the consumer price index CPI) in 2007 using 2006 as the base year. Show all your work.
$$\begin{array} { l l r l r l } \hline \text { Good } & \text { Quantity } & \text { Price } & \begin{array} { l } \text { 2006 Total } \\\text { Expenditure }\end{array} & \text { Price } & \begin{array} { l } \text { 2007 Total } \\\text { Expenditure }\end{array} \\\hline \text { Bagels } & 100 & \$ 1.00 & & \$ 1.50 & \\\text { Shoes } & 10 & \$ 45.00 & & \$ 50.00 & \\\text { DVDs } & 20 & \$ 10.00 & & \$ 12.00 & \\\hline\end{array}$$

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Definitions:

Present Value Method

A technique used to determine the present value of future cash flows or income streams to evaluate investment projects or financial products.

Net Market Value

The amount that could be obtained from selling an asset in the market after deducting any selling costs or liabilities.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Provisions

Liabilities of uncertain timing or amount, set aside for future expenses or liabilities.