help please : Test your ability to DERIVE a price index with this simple example
ID: 1231587 • Letter: H
Question
help please : Test your ability to DERIVE a price index with this simple example. Suppose that the typical student consumer basket is made up of only three items: The typical student consumes 1000 meals each year, makes 12 housing payments each year, and pays for 40 credit-hours of tuition each year. Since the base year, the price of meals rises from $5 to $6.20, housing payments go from $300 to $330, and tuition goes from $45 to $58 per credit hour. Waht is the later year's "student CPI"? The later-year's Student CPI is ______ [Answer with a number only, please]Explanation / Answer
CPI = total later year price / total base year price
total base year price = 1000 x 5 + 12 x 300 + 40 x45 = $ 10400
total later year price = 1000 x 6.2 + 12 x330 + 40 x 58 = $ 12480
CPI = 12480 / 10400 = 1.2
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