Question
The prices in the following table below are for three components in a typical consumer's budget: transportation, rent, and food. Year 1: Rent- 900; Food-
The prices in the following table below are for three components in a typical consumer's budget: transportation, rent, and food.
Year 1: Rent- 900; Food- 450; Transport- 85
Year 2: Rent: 925; Food- 480; Transport- 85
Year 3: Rent: 1000; Food- 510; Transport- 90
Year 4: Rent: 1025; Food- 530; Transport- 90
Year 5: Rent- 1115; Food- 560; Transport- 95
Fill in the following composite price index based on the above three components using the assumption that rent accounts for 50 percent of the weight in this index, food for 40 percent, and transport for 10 percent. Use year 1 as the base year. (Tip: You should start by computing an index for each component).
CPI of Year 1, 2, 3, 4 & 5
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