Use the following table to answer question. The table shows the prices and the quanti­ties consumed in Carnivore Country. Suppose the base year is 2017. Also, suppose that 2017 is the year the typical consumption basket was determined, so the quantities consumed in 2017 are the only quantities needed to calculate the CPI in each year.

Question

Year Price of Beef Quantity of Beef Price of Pork Quantity of Pork
2017 $2.00 100 $1.00 100
2018 2.50 90 0.90 120
2019 2.75 105 1.00 130

What is the value of the basket in the base year?
a. $300
b. $333
c. $418.75
d. $459.25
e. none of the above

Answer 1

To calculate the value of the consumption basket in the base year (2017), we use the prices and quantities of beef and pork in that year.

From the table for the year 2017:

• Price of Beef: $2.00
• Quantity of Beef: 100
• Price of Pork: $1.00
• Quantity of Pork: 100

Now, we calculate the total cost for each item in the basket:

1. Total cost of Beef = Price of Beef × Quantity of Beef \[ \text{Total cost of Beef} = 2.00 \times 100 = 200 \]

2. Total cost of Pork = Price of Pork × Quantity of Pork \[ \text{Total cost of Pork} = 1.00 \times 100 = 100 \]

Now, we sum the total cost of beef and pork to get the total value of the basket in 2017:

\[ \text{Total value of the basket} = \text{Total cost of Beef} + \text{Total cost of Pork} = 200 + 100 = 300 \]

Thus, the value of the basket in the base year is $300.

So the correct answer is: a. $300