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Calculating changes in price level Quantity in Basket 2006 2007 2008 Price Cost of Basket Price Cost of Basket Price Cost of Basket Notebooks 15 $2 $30 $5 $75 $8 $120 Calculators 1 $70 $70 $100 $100 $130 $130 Large coffees 250 $2 $500 $2 $500 $2 $500 Highly caffeinated colas 50 $2 $100 $4 $200 $6 $300 Textbooks 10 $120 $1,200 $150 $1500 $180 $1800 Total cost $1,900 $2,375 $2,850 Price index The total cost of a market basket of goods increased by % from 2006 to 2007, and by % from 2006 to 2008. Use this information to determine the value of the price index in each year (using 2006 as the base year) and enter these values into the preceding table.

Calculating changes in price level Quantity in Basket 2006 2007 2008 Price Cost of Basket Price Cost of Basket Price Cost of Basket Notebooks 15 $2 $30 $5 $75 $8 $120 Calculators 1 $70 $70 $100 $100 $130 $130 Large coffees 250 $2 $500 $2 $500 $2 $500 Highly caffeinated colas 50 $2 $100 $4 $200 $6 $300 Textbooks 10 $120 $1,200 $150 $1500 $180 $1800 Total cost $1,900 $2,375 $2,850 Price index The total cost of a market basket of goods increased by % from 2006 to 2007, and by % from 2006 to 2008. Use this information to determine the value of the price index in each year (using 2006 as the base year) and enter these values into the preceding table.

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter4: The Market Forces Of Supply And Demand
Section: Chapter Questions
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5. Calculating changes in price level Quantity in Basket 2006 2007 2008 Price Cost of Basket Price Cost of Basket Price Cost of Basket Notebooks 15 $2 $30 $5 $75 $8 $120 Calculators 1 $70 $70 $100 $100 $130 $130 Large coffees 250 $2 $500 $2 $500 $2 $500 Highly caffeinated colas 50 $2 $100 $4 $200 $6 $300 Textbooks 10 $120 $1,200 $150 $1500 $180 $1800 Total cost $1,900 $2,375 $2,850 Price index The total cost of a market basket of goods increased by % from 2006 to 2007, and by % from 2006 to 2008. Use this information to determine the value of the price index in each year (using 2006 as the base year) and enter these values into the preceding table.

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