Please help go over answers to see if they are correct. The dean of Westland Col
ID: 1139057 • Letter: P
Question
Please help go over answers to see if they are correct.
The dean of Westland College is investigating the rising prices of textbooks and has asked you to put together a textbook price index. You have determined that the average student purchases 3 Art History, 2 Sociology, and 5 Economics textbooks per year. The prices of these textbooks in the past few years are provided in the table below. Please answer the following seven questions, rounding all answers to the nearest integer 2010 $173.00 $271.00 $83.00 What is the percent change in the price of a textbook from 2010 to 2012 in 2011 $193.00 $276.00 $93.00 2012 $210.00 $296.00 $118.00 Art History Sociology conomics Art History? Number 21.4 Sociology? Number 9.2 Economics? Number 32.5 Now, using 2010 as a base year, create a price index for these books. What is the price index in 2012? Number 122.8 Lastly, what is the percent change in the price index from 2010 to 2012? 2010? Number 100 2011? Number 108.1 Number 22.8Explanation / Answer
Answer
Formula of % change = (New - Old/Old )*100
Percentage Change in Price of Textbooks From 2010 to 2012 in
Art History = ((210-173)/173)*100 = 21.4%
Sociology = (296 - 271)/271)*100 = 9.2%
Economics = ((118 - 83)/83)*100 = 42.2%
Now Lets Calculate Price Index using GDP Deflator For all year:
YEAR (2010) = GDP Deflator = Real / Nominal *100. As Base Year is 2010 hence Real GDP = Nominal GDP for 2010, Hence Price Index = 100
YEAR (2011) = ((3*193 + 2*276 + 5*93)/(3*173 + 2*271 + 5*83))*100 = 108.1
YEAR (2012) = ((3*210 + 2*296 + 5*118)/(3*173 + 2*271 + 5*83))*100 = 122.8
Hence Using 2010 as base Year. Price Index in
Year 2010 is 100
Year 2011 is 108.1
Year 2012 is 122.8
Percentage Change in Price = ((Price Index(2012) - Price Index(2010)/Price Index(2010))*100
= ((122.8 - 100)/100)*100
= 22.8%
Hence Percentage Change in Price Index from 2010 to 2012 = 22.8%
You can see from above that all your answers are correct except Percentage Change in Price of Economics. You can see from above that Percentage Change in Price of Economics = 42% instead of 32.5%.(As you have done previous Parts correct this means you have done some calculation error in this part)
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