Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6 . Calculating inflation using a simple price index Consider a ctional price index, the College Student Price Index [CSPI], based on a typical college

image text in transcribedimage text in transcribed

image text in transcribedimage text in transcribed
6 . Calculating inflation using a simple price index Consider a ctional price index, the College Student Price Index [CSPI], based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 201?, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Pelform these same calculations for 2018 and 2019, and enter the results in the followlng table. 2017 2013 2019 Price Cost Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) Notebooks 10 2 20 1 E 3 E Calculators 1 50 50 54 E 75 E Large coffees 200 1 200 1 E 1 C Energy drinks 100 2 200 3 E 4 E Textbooks 10 100 1,000 120 E 150 E Total cost 1,470 E S Price index 100 E E Suppose the base year for this price index is 2017. In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by . Between 2013 and 2019, the CSPI increased by % . Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. C] The quality and design of calculators improved dramatically from 201? to 2019. For example, calculators made in 2019 accept memory cards, whereas those made in 2017 do not, but this quality change is hard to measure. C] A new, safe method of memory enhancement became available for purchase. C] Professors required each student to buy 10 notebooks, regardless of the price. D As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics A Modern Approach

Authors: Jeffrey Wooldridge

7th Edition

1337558869, 978-1337558860

More Books

Students also viewed these Economics questions

Question

Pay him, do not wait until I sign

Answered: 1 week ago

Question

Speak clearly and distinctly with moderate energy

Answered: 1 week ago