Use the following to answer questions .
Exhibit: Market Basket for a Typical College Student

-(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007. What is the value of the price index in 2008?

Question

Use the following to answer questions .
Exhibit: Market Basket for a Typical College Student
 
-(Exhibit: Market Basket for a Typical College Student) Suppose the base year is 2007. What is the value of the price index in 2008?

Quizplus · Accepted Answer

To find the price index, we need to calculate the cost of the market basket in the given year and divide it by the cost of the market basket in the base year, then multiply by 100. Using the given data, the cost of the market basket in 2007 is $30.60 while in 2008 it is $34.80. So, the price index in 2008 would be (34.80/30.60) x 100 = 113.73 or rounded to 1 decimal place, 1.14. Therefore, the best choice is B.

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