Prices of a given basket of commodities which are bought by the representative consumer is indicated by which of the following?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Consumer Price Index
The Consumer Price Index (CPI) measures the average change in prices of a fixed basket of goods and services typically purchased by a representative consumer over time.
It reflects the cost of living and is commonly used to measure inflation from the consumer’s perspective.
In contrast: The Wholesale Price Index (WPI) measures price changes at the wholesale level, i.e., before goods reach the retail market.