Answer the questions in Exercise 1.17, this time assuming that the quantities purchased are 12 loaves of bread, 6 pounds of meat, and 2 gallons of milk.

Exercise 1.17

Table 1.15 shows the prices of three items in 2000 and 2010.

a. Construct a price index that is equal to 100 in 2000. What is the value of your index in 2010? What is the percentage change in your index between 2000 and 2010?

b. Construct a price index that is equal to 100 in 2010. What is the value of your index in 2000? What is the percentage change in your index between 2000 and 2010?

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Quantity 2000 Price 2010 Price Loaf of bread 10 $2.50 $3.00 Pound of meat 6 $4.00 $5.00 Gallon of milk 3 $5.00 $7.00