Refer to the information provided in Table 7.5 below to answer the questions that follow.
Table 7.5
-Refer to Table 7.5. Suppose 2014 is the base year. The price index in 2014 is
A) 1,000.
B) 100.
C) 10.
D) 1.

Question

Refer to the information provided in Table 7.5 below to answer the questions that follow.
Table 7.5 
-Refer to Table 7.5. Suppose 2014 is the base year. The price index in 2014 is
A) 1,000. 
B) 100. 
C) 10. 
D) 1.

Quizplus · Accepted Answer

To calculate the price index, we need to find the average price of the goods in the given year and divide it by the average price of the same goods in the base year (2014).

For 2014:
Average price = (5 + 10 + 15)/3 = 10
Price index = 10/10 = 1

For 2015:
Average price = (10 + 15 + 20)/3 = 15
Price index = 15/10 = 1.5

For 2016:
Average price = (15 + 20 + 25)/3 = 20
Price index = 20/10 = 2

For 2017:
Average price = (20 + 25 + 30)/3 = 25
Price index = 25/10 = 2.5

For 2018:
Average price = (25 + 30 + 35)/3 = 30
Price index = 30/10 = 3

Therefore, the price index in 2014 is 100 (since it is the base year, the price index is always 100).

Refer to the Information Provided in Table 7