Prices of a given basket of commodities which are bought by the representative consumer is indicated by which of the following?
- Wholesale Price Index
- Consumer Price Index
- Market price
- Commodity Price
Prices of a given basket of commodities which are bought by the representative consumer is indicated by which of the following?
- Wholesale Price Index
- Consumer Price Index
- Market price
- Commodity Price
Solution
Option 1 -> Measures prices at wholesale level before reaching consumers, not retail consumer purchases.
Option 2 -> Specifically tracks weighted average prices of a basket of goods and services purchased by households.
Option 3 -> General term for selling price in market, not a systematic measure of consumer baskets.
Option 4 -> Refers to prices of raw materials or primary products, not consumer goods baskets.
Hence, Consumer Price Index -> The CPI is specifically designed to measure the change in prices paid by consumers for a representative basket of goods and services. It tracks items that typical households purchase including food, clothing, housing, transportation, medical care, and entertainment. This makes it the key indicator of inflation from a consumer's perspective and reflects the cost of living for the representative consumer. -> correct
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