1. The following table reports prices and usage quantities for two items in 2016 and 2018.

Quantity Unit Price ($)

Item 2016 2018 2016 2018 A 1500 1800 7.50 7.75 B 2 1 630.00 1500.00

a. Compute price relatives for each item in 2018 using 2016 as the base period.

b. Compute an unweighted aggregate price index for the two items in 2018 using 2016 as the base period.

c. Compute a weighted aggregate price index for the two items using the Laspeyres method.

d. Compute a weighted aggregate price index for the two items using the Paasche method.

2. An item with a price relative of 132 cost $10.75 in 2018. Its base year was 2001.

a. What was the percentage increase or decrease in cost of the item over the 17-year period?

b. What did the item cost in 2001?