Answer :
Final answer:
To calculate the cost of rice in 2022 using the wholesale price index of 130 compared to the base year 2020, multiply the 2020 cost of $12 per kg by the index ratio (1.30) to find the 2022 cost of $15.60 per kg.
Explanation:
The question involves calculating the cost of an item in a different year using a given wholesale price index (WPI), which is a type of price relative. The WPI for rice in 2022 compared to 2020 is 130. This means that on average, prices have increased by 30% from 2020 to 2022. If the price of rice was $12 per kg in 2020, to calculate the cost in 2022, we use the following formula:
- Cost in 2022 = Cost in 2020 × (WPI in 2022 / WPI in 2020)
Since the WPI in 2020 is considered to be 100 (the base year), we have:
- Cost in 2022 = $12 × (130 / 100) = $12 × 1.3 = $15.60
Therefore, the cost of rice in 2022 is $15.60 per kg.
