Table 5-2 shows the market basket for a typical college student. Use this data to answer questions .
Table 5-2

-Refer to Table 5-2. Suppose the base year is 2007. What is the value of the price index in 2007?

Question

Table 5-2 shows the market basket for a typical college student. Use this data to answer questions .
Table 5-2
 
-Refer to Table 5-2. Suppose the base year is 2007. What is the value of the price index in 2007?

Quizplus · Accepted Answer

To calculate the price index, we need to find the sum of the cost of the market basket in the current year (which is also the given year, 2007) and divide it by the sum of the cost of the market basket in the base year (also 2007 in this case) and then multiply by 100.

Sum of cost in 2007 = $2.50 + $1.50 + $0.50 + $3.00 + $3.50 + $1.00 = $12.00

Price index in 2007 = (12 / 12) x 100 = 100

Therefore, the answer is B) 1.00, as the price index in the base year is always 100.

Table 5-2 Shows the Market Basket for a Typical College