Think of an economy consisting of two people Susan and Pierr

Think of an economy consisting of two people, Susan and Pierre. They only consume books and food: Susan receives meals for free from a foreign admirer, and she only buys 22 books a week for the price of $5 each. Pierre has no time to read, and he buys 21 meals a week for the price of $10 apiece. Calculate Susan and Pierre\'s expenditures and their total expenditure. What is the CP basket of goods?

Solution

Susan expenditure = 22 books X $ 5

Susan expenditure = $ 110

Pierre expenditure = 21 meals X $ 10

Pierre expenditure = $ 210

Total expenditure = $ 320

Consumer price index = (Price of basket of goods and services in current year / Price of basket in base year ) X 100

Base year = current year

Consumer price index = 100