Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 22, Problem 2SCQ

Construct the price index for a “fruit basket” in each year using 2003 as the base year.

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Suppose that before the end of the year a typical consumer purchased 125 apples, 60 bananas, and 85 oranges. Year 1 Year 2 Price of apple Price of banana 0.75 \$ 0.90 0.20 0.45 Price of orange 24 0.25 \$ 0.60 What is the price index for year 2, using year 1 as the base year (round to the nearest full number)?
The Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for \$7,500 in 1999? Year CPI 1960 29.6 1973 1986 44.4 109.6 156.9 1999 2012 229.6 In 2012, a car would sell for approximately \$ 58,176 (Round to the nearest dollar.)
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