Foundations of Economics, 8th Edition

23.1 The Consumer Price Index

MyEconLab Concept Video

To see which movie was the biggest box office hit, we need a way of comparing prices in different periods. That’s what the Consumer Price Index or CPI enables us to do. The Consumer Price Index is a measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services. The Bureau of Labor Statistics (BLS) calculates the CPI every month, and we can use these numbers to compare what the fixed market basket costs this month with what it cost in some previous month or other period.

Consumer Price Index

A measure of the average of the prices paid by urban consumers for a fixed market basket of consumption goods and services.

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