A consumer expenditure survey reports the following information on entertainment spending: Using 2008 as the base year, by how much does a "cost of entertainment" index increase between 2008 and 2009?

Question

A consumer expenditure survey reports the following information on entertainment spending:  Using 2008 as the base year, by how much does a "cost of entertainment" index increase between 2008 and 2009?

Quizplus · Accepted Answer

The entertainment cost in 2008 was (5 × $7) + (2 × $30) + (7 × $16) = $207. Entertainment cost in 2009 was (5 × $8) + (2 × $35) + (7 × $15) = $215, so the entertainment price index is 1.039, or an increase of 3.9 percent.

A Consumer Expenditure Survey Reports the Following Information on Entertainment