The cost of the basket of goods in 2009 is $550 and the cost of the basket of goods in 2010 is $700. If 2009 is used as the base year, the price index for 2010 is:

Question

Quizplus · Accepted Answer

To calculate the price index, we use the formula:
Price Index = (Cost of Basket in Current Year / Cost of Basket in Base Year) x 100
Using 2009 as the base year, we have:
Price Index = (Cost of Basket in 2010 / Cost of Basket in 2009) x 100
Price Index = ($700 / $550) x 100
Price Index = 127.2
Therefore, the price index for 2010 is 127.2.

The Cost of the Basket of Goods in 2009 Is