Data for selected vegetables purchased at wholesale prices for 1995 and 2007 are shown in the following table. What is the value index?
A)110.3
B)115.6
C)108.0
D)118.5

Question

Data for selected vegetables purchased at wholesale prices for 1995 and 2007 are shown in the following table.  What is the value index?
A)110.3 
B)115.6 
C)108.0 
D)118.5

Quizplus · Accepted Answer

To calculate the value index, we need to use the formula:
Value Index = (Current Year Cost of Market Basket / Base Year Cost of Market Basket) x 100

Taking the average of the prices of the vegetables in the base year (1995), we get:
((0.42+1.07+0.66+1.58+0.47)/5) = 0.860

Using the same method for the current year (2007), we get:
((0.78+1.99+0.99+2.17+0.90)/5) = 1.166

Now, using the formula, we get:
Value Index = (1.166/0.86) x 100 = 135.11

Therefore, the value index is 135.11, which is closest to option B (115.6).

Data for Selected Vegetables Purchased at Wholesale Prices for 1995