The table below indicates the price and output data over a five year period for an economy that produces only one good.

-Refer to the above data.If year 3 is chosen as the base year,the price index for year 1:
A) is 140.
B) is 40.
C) is 167.
D) is 50.

Question

The table below indicates the price and output data over a five year period for an economy that produces only one good.
 
-Refer to the above data.If year 3 is chosen as the base year,the price index for year 1:
A) is 140. 
B) is 40. 
C) is 167. 
D) is 50.

Quizplus · Accepted Answer

The price index is calculated as (Price in Year 1 / Price in Base Year) * 100. If Year 3 is the base year, and assuming the price in Year 1 is half of that in Year 3, the index would be 50.

The Table Below Indicates the Price and Output Data Over