1)The March 2000 CPI (1982--84 = 100) was 171 but the component of the CPI for t

Question

1)The March 2000 CPI (1982--84 = 100) was 171 but the component of the CPI for television sets was 52. There were great improvement in quality and features in television sets between 1982--84 and 2000. We can say that:
Answer
a)the actual average price of television sets in 2000 was only 52% of the average price in 1982--84
b)the actual average price of television sets in 2000 was 171% of the average price in 1982--1984
c)if a television set sold for $100 in 1982--1984, that same set would sell for only $52 in 2000
d)both (a)and (c) are correct

2)In addition to the national CPIs, the BLS publishes separate CPIs for 29 large metropolitan areas. These local CPIs are considerably less precise (that is, they have considerably more sampling variation). This is because
Answer
a)of variation in prices among these metropolitan areas
b)the monthly CPI sample size within each metropolitan area is much smaller than the national sample size
c)the monthly CPI sample sizes within the metropolitan areas are not proportional to their population sizes
d)the metropolitan areas are not randomly selected
e)of variation weather conditions among these metropolitan areas

3)An ad from a local appliance store says, “Double the Difference Price Protection: If, during the first 30 days from the date you purchase a product from H.H. Gregg, you find the same item at a lower price at another store we will refund 200% of the difference.” What does this mean?
Answer
a)It means that H.H. Gregg will reduce its price by 200%
b)It means that H.H. Gregg will reduce its price to one-third of what it was
c)It makes perfectly good sense, as long as the other store’s price is at least half of H.H. Gregg’s price.
d)It’s nonsense, because refunding 100 percent of the difference already reduces the cost to zero
e)It’s nonsense because percents only make sense for counts, and the price of an appliance isn’t a count

Explanation / Answer

1. a and c CPI shows percentage increase or decrease from a base level of 100 (ie CPI of 120 means prices are 20 percent higher). 2. b The larger the sample, the smaller the variance. 3. c If the other price were less than half Gregg would be paying you to purchase the item.

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