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28 June, 08:00

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. if 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the cpi for 2009, using 2002 as the base year, is:

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  1. 28 June, 08:24
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    To find the CPI value using 2002 dollars, begin by finding the 2002 value of the basket: in this case, 5 apples would be $2.50 and 10 oranges would be $10.00 for a total of $12.50. Then, find the value using 2009 prices: 5 apples would be $5.00 and 10 oranges would also be $5.00, giving a total basket of $10.00. Divide the 2002 value by the 2009 value to find the index: (12.50/10.00) gives a ratio of 1.25.
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