1. Calculating inflation using a simple price index Consider a fictional price i
ID: 1138120 • Letter: 1
Question
1. Calculating inflation using a simple price index Consider a fictional price inde, the College Student Price Index (CSP), based on a typical college student's annual puschases table shows information on th market basket for the CSPt and the prices of each of the goods in 2014, 2015, and 2016 Suppose the folloning The cost of each item in the basket and the total cost of the basket ane shown for 2014 Penform tnese same calculations for 2015 and 2016, and enter the results in the following table 2014 2015 2016 Price Cost Price Cost Price Cost Quantity in Basket (Dollars) (Dolars) (Dollars) (Dollars) (Dellars) (Dallara) 75 75 600 150 720 1,575 100 Large coffees Energy drinks 300 75 10 120 Total cost Price index Suppose the base year for this price index is 2014 In the lest row of the table, calcuiate and enter the value of the CSPt for the remaining years Between 2014 and 201s, the CSM increased by %-5tween 2015 and 2016, the CSP! ¡°eased by antrate why price ndenes such as th, csn mam overstate enesen in the oost or going to colege, owker ythich ofth·fullowry, that apply. trve, wo O As the price of calculat Get this answer with Chegg Study their computers. Professors nequired eac View this answer avor, but O Energy drinks becane this quality change is hExplanation / Answer
2014 2015 2016 Quantity in Basket Price Cost Price Cost Price Cost Notebooks 10 3 30 3 30 4 40 Calculators 1 75 75 80 80 104 104 Large coffees 300 2 600 2 600 2 600 Energy drinks 75 2 150 4 300 5 375 Textbooks 8 90 720 110 880 120 960 Total cost 1575 1890 2079 Price index 100 120 132 Between 2014and 2015 CSPI increases by 120-100 =20% Between 2015 and 2016 it increases by (132-120) =12% Price Index = (Cost of basket in year/Cost of same basket in base year)*100 * Last question is hidden.
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