$$\begin{array} { l c c c }
\hline \text { Product } & \begin{array} { c }
\text { Quantity in } \
\text { market basket } \
\text { (no.) }
\end{array} & \begin{array} { c }
\text { Price in } \
\text { base year } \
( \$ )
\end{array} & \begin{array} { c }
\text { Price in } \
\text { current year } \
( \$ )
\end{array} \
\hline \text { Bread } & 10 & 1.00 & 1.50 \
\text { Milk } & 5 & 1.00 & 2.00 \
\text { Chewing gum } & 50 & 0.20 & 0.50 \
\hline
\end{array}$$
-Refer to the table in the exhibit.How much did the price index change from the base year to the current year?

Question

$$\begin{array} { l c c c } 
\hline \text { Product } & \begin{array} { c } 
\text { Quantity in } \
\text { market basket } \
\text { (no.) }
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { base year } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { current year } \
( \$ )
\end{array} \
\hline \text { Bread } & 10 & 1.00 & 1.50 \
\text { Milk } & 5 & 1.00 & 2.00 \
\text { Chewing gum } & 50 & 0.20 & 0.50 \
\hline
\end{array}$$
-Refer to the table in the exhibit.How much did the price index change from the base year to the current year?

Quizplus · Accepted Answer

The price index in the base year is calculated by summing the products of the quantities and the base year prices, and the same is done for the current year prices. The base year index is (10*$1 + 5*$1 + 50*$0.20) = $10 + $5 + $10 = $25. The current year index is (10*$1.50 + 5*$2 + 50*$0.50) = $15 + $10 + $25 = $50. The change in the price index is from $25 to $50, which is a 100 percent increase.

-Refer to the Table in the Exhibit