If a market basket was defined in 2014 and it cost $10,000 to purchase the items in that basket in 2014, while it cost $11,000 to purchase those identical goods in 2015, then the price index for 2015 is

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Quizplus · Accepted Answer

The price index for a given year is calculated by taking the cost of the market basket in the given year, dividing it by the cost of the same basket in the base year, and then multiplying by 100. In this case, the cost in 2015 ($11,000) divided by the cost in 2014 ($10,000), the base year, times 100 gives a price index of 110.

If a Market Basket Was Defined in 2014 and It