If a good cost $500 in the base year and $575 in a later year, the price index number for this good in the later year was:
A) 75.0.
B) 115.0.
C) 175.0.
D) 575.0.

Question

Quizplus · Accepted Answer

The price index number is calculated by taking the price in the later year, dividing it by the price in the base year, and then multiplying by 100. So, for this good, it would be (575 / 500) * 100 = 115.0.

If a Good Cost $500 in the Base Year and $575