Consider a fictional price index the College Student Price I

Consider a fictional price index, the College Student Price Index (CSPI), based on a survey of annual purchases of a typical college student Suppose the following table shows information on the market basket for the CSPI and the prices of each good in 2012, 2013, and 2014. 2012 2013 2014 Cost of Cost of Basket Cost of Basket Quantity in Basket Price Bas Price Price Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index 10 20 1 50 200 100 50 54 75 200 200 10 100 1,000 120 150 $1,470 100 The cost of each item in the basket and the total cost of the basket are shown for 2012. Perform these same calculations for 2013 and 2014, and enter the results in the table. Suppose the base year for this price index is 2012. Calculate and enter the value of the CSPI for the remaining years in the last row of the table. Between 2012 and 2013, the CSPI increased by Between 2013 and 2014, the CSPI increased by

Solution

2012 2013 2014 Quantity Price Cost Price Cost Price Cost Notebooks 10 2 20 1 10 3 30 Calculators 1 50 50 54 54 75 75 Large coffees 200 1 200 1 200 1 200 Energy drinks 100 2 200 3 300 4 400 Textbooks 10 100 1000 120 1200 150 1500 Total cost 1470 1764 2205 Price index 100 120 150 (1764/1470 *100) (2205/1470*100) Between 2013 and 2012: (120-100) = 20% Between 2014 and 2013, CSPI increases by (150/120*100) -100 = 25%