<p>The <a href="http://www.investopedia.com/terms/c/consumerpriceindex.asp" rel="nofollow noreferrer">Consumer price index</a> of a country is defined as:</p>

<p>$$CPI_{t}^{t_0}={{P_{1t} Q_{1t_0}+P_{2t}Q_{2t_0}+P_{3t}Q_{3t_0}}\over{P_{1t_0}}Q_{1t_0}+P_{2t_0}Q_{2t_0}+P_{3t_0}Q_{3t_0}} \times 100$$</p>

<p>where $P$ is price, $Q$ is quantity, $t$ is reference to current year and  $t_0$ is reference to the base year.</p>

<p>So using this formula we get: </p>

<p>$${{10\times8 +4 \times 15+18 \times 6}\over{9 \times 8+3 \times 15 +12 \times 6}} \times 100 \approx 131.2 $$</p>

<p>Now finding the inflation rate we can see (CPI of the base year is always going to be $100$)</p>

<p>$${{131.2-100}\over{100}} \times 100 \% \approx 31\%$$</p>

<p>Hope this is helpful!</p>

CC BY-SA 3.0
2017-06-18T17:53:02.873Z
2017-06-18T17:53:02.873Z
Bensstats
<p>Presumably if you are to assume 2014 is the base year, you should weight prices in 2016 and 2014 by 2014 quantities, giving  </p>

<p>$$\dfrac{10\times 8+4\times 15+18\times 6}{9\times 8+3\times 15+12\times 6} \approx 1.312$$</p>

<p>i.e. a percentage increase of about $31\%$</p>

CC BY-SA 3.0
2017-06-18T15:33:07.837Z
2017-06-18T15:33:07.837Z
Henry
<blockquote>
  <p>The following table lists the basket of goods in the 
  Consumer Price Index for the nation of Astro​ (Assume 2014 is the base​ year.) </p>
</blockquote>

<pre><code>  Table 6.2  
             2014     2014  2015     2015  2016     2016
             quantity price quantity price quantity price
  Sunglasses  8        $9      10      $11   7       $10
  Toothpaste  15        3      18       4    15       4
  Ferrets     6         12     4        15   9        18
</code></pre>

<blockquote>
  <p>Using the information in Table​ 6.2, the percent increase in prices over the two year period from 2014 to 2016 is approximately  </p>
</blockquote>

<p>The correct answer is 31% but I kept on getting 35%. 
My solution was (CPI of 2016 - 100)/100</p>

CC BY-SA 3.0
2017-06-18T16:13:18.533Z
Can you add more details on how you calculated the CPI of 2016? These type of questions risk being closed as off-topic if little effort is shown.
luchonacho
<inflation>
Solving for price incease
Csparkx
# Solving for price incease

(Asked by: username_0 on 2017-06-18)

The following table lists the basket of goods in the 
  Consumer Price Index for the nation of Astro​ (Assume 2014 is the base​ year.) 

  Table 6.2  
             2014     2014  2015     2015  2016     2016
             quantity price quantity price quantity price
  Sunglasses  8        $9      10      $11   7       $10
  Toothpaste  15        3      18       4    15       4
  Ferrets     6         12     4        15   9        18


Using the information in Table​ 6.2, the percent increase in prices over the two year period from 2014 to 2016 is approximately  

The correct answer is 31% but I kept on getting 35%. 
My solution was (CPI of 2016 - 100)/100

**Tags:** inflation

> **Comments:**
> **username_1**: Can you add more details on how you calculated the CPI of 2016? These type of questions risk being closed as off-topic if little effort is shown.  

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## 2 answers

### Answer by username_2 on 2017-06-18. Score: 1

The [Consumer price index](http://www.investopedia.com/terms/c/consumerpriceindex.asp) of a country is defined as:

$$CPI\_{t}^{t\_0}={{P\_{1t} Q\_{1t\_0}+P\_{2t}Q\_{2t\_0}+P\_{3t}Q\_{3t\_0}}\over{P\_{1t\_0}}Q\_{1t\_0}+P\_{2t\_0}Q\_{2t\_0}+P\_{3t\_0}Q\_{3t\_0}} \times 100$$

where $P$ is price, $Q$ is quantity, $t$ is reference to current year and $t\_0$ is reference to the base year.

So using this formula we get:

$${{10\times8 +4 \times 15+18 \times 6}\over{9 \times 8+3 \times 15 +12 \times 6}} \times 100 \approx 131.2 $$

Now finding the inflation rate we can see (CPI of the base year is always going to be $100$)

$${{131.2-100}\over{100}} \times 100 \% \approx 31\%$$

Hope this is helpful!


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### Answer by username_3 on 2017-06-18. Score: 0

Presumably if you are to assume 2014 is the base year, you should weight prices in 2016 and 2014 by 2014 quantities, giving

$$\dfrac{10\times 8+4\times 15+18\times 6}{9\times 8+3\times 15+12\times 6} \approx 1.312$$

i.e. a percentage increase of about $31\%$


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