Using 2010 as the base year,the 2012 value of a simple price index for the following price data is _____________.
A)77.60
B)114.13
C)160.58
D)99.30
E)100.00

Question

Using 2010 as the base year,the 2012 value of a simple price index for the following price data is _____________. 
A)77.60 
B)114.13 
C)160.58 
D)99.30 
E)100.00

Quizplus · Accepted Answer

To calculate the value of the index, we need to divide the total cost of all items in the given year by their total cost in the base year, and then multiply by 100.

Total cost in 2010 = 5 x $10.50 + 2.5 x $25.00 + 0.1 x $100.00 = $52.50 + $62.50 + $10.00 = $125.00
Total cost in 2012 = 5 x $11.50 + 2.5 x $28.00 + 0.1 x $110.00 = $57.50 + $70.00 + $11.00 = $138.50

Index value = (138.50/125.00) x 100 = 110.80, rounded to two decimal places, which is closest to option B, 114.13.

Using 2010 as the Base Year,the 2012 Value of a Simple