1.Calculating inflation using a simple price index Consider a fictional price index, the college student Price index (CSPI), based on a typical college students annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012. the cost of each item in the basket and the total cost of the basket are shown for 2010. Perform these same calculations for 2011 and 2012, and enter the results in the following table
1.Calculating inflation using a simple
Consider a fictional price index, the college student Price index (CSPI), based on a typical college students annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012.
the cost of each item in the basket and the total cost of the basket are shown for 2010.
Perform these same calculations for 2011 and 2012, and enter the results in the following table.
2010 2011. 2012
Quantity in baskets
Notebooks 10
Calculators 1
Large coffees 150
Energy drinks 50
Textbooks. 10
Total cost. 5
Price index 5
2010. 2011. 2012
Price. Cost. Price Cost. Price Cost
5 50 7 11
100 100 110 140
1 150 1 1
2 100 3 4
100 1,000 120 150
5 1,400 5 5
5 100 5 5
Inflation is the rise in Price level (P) over a certain period of time
The consumer price index(CPI) measures avg change in prices(P) over a period of time for basket of goods & services. This economic indicator is used to measure the inflation. Thus guides in making informed decisions regarding the economy.
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