Answer to Question #213113 in Macroeconomics for Adnan

Question

A basket of food contains 200kg of cheery and 10 kg of sugar. In 2020 the prices of these food items 

were Rs. 150 per kg respectively. In 2021 the recorded prices of cheery and sugar is Rs. 200 per kg and 

Rs.110 per kg respectively. Calculate CPI and interpret the result.

Answer 1

$CPI_{cherry}=\frac{price\space in\space 2021}{price\space in\space 2020}\times100=200/150\times100=133.33\%$

$CPI_{sugar}=$ $\frac{price\space in\space 2021}{price\space in\space 2020}\times100=110/150\times100=73.33\%$