Calculating inflation using a simple price index Consider a fictional price index, the college student Price index (CSPI), based on a typical college students annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012. the cost of each item in the basket and the total cost of the basket are shown for 2010. Perform these same calculations for 2011 and 2012, and enter the results in the following table. 2010 2011. 2012 Quantity in baskets Notebooks 10 Calculators 1 Large coffees 150 Energy drinks 50 Textbooks. 10 Total cost. 5 Price index 5 2010. 2011. 2012 Price. Cost. Price Cost. Price Cost 5 50 7 11 100 100 110 140 1 150 1 1 2 100 3 4 100 1,000 120 150 5 1,400 5 5 5 100 5 5 Suppose the base year for this price index is 2010. In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2010 and 2011, CSPI increased by what percent? Between 2011 and 2012, the CSPI increased by what percent? Which of the following, if true would illustrate why price index such such as the CSPI might overstate inflation In the cost of going to college ? Check all that apply. The quality of textbooks increased dramatically from 2010 to 2012,with textbook companies bundling new online study aids with their books. Professors required each student to buy 10 notebooks , regardless of the price. As the price of energy drinks increased relative to the price of coffee between 2010 and 2012, students decreased their consumption of energy drinks and increased their consumption of coffee. A new type of personal transporter, which made it easier to get around places like a university campuses, became available for purchase.
Calculating inflation using a simple price index
Consider a fictional price index, the college student Price index (CSPI), based on a typical college students annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012.
the cost of each item in the basket and the total cost of the basket are shown for 2010.
Perform these same calculations for 2011 and 2012, and enter the results in the following table.
2010 2011. 2012
Quantity in baskets
Notebooks 10
Calculators 1
Large coffees 150
Energy drinks 50
Textbooks. 10
Total cost. 5
Price index 5
2010. 2011. 2012
Price. Cost. Price Cost. Price Cost
5 50 7 11
100 100 110 140
1 150 1 1
2 100 3 4
100 1,000 120 150
5 1,400 5 5
5 100 5 5
Suppose the base year for this price index is 2010.
In the last row of the table, calculate and enter the value of the CSPI for the remaining years.
Between 2010 and 2011, CSPI increased by what percent? Between 2011 and 2012, the CSPI increased by what percent?
Which of the following, if true would illustrate why price index such such as the CSPI might overstate inflation In the cost of going to college ? Check all that apply.
The quality of textbooks increased dramatically from 2010 to 2012,with textbook companies bundling new online study aids with their books.
Professors required each student to buy 10 notebooks , regardless of the price.
As the price of energy drinks increased relative to the price of coffee between 2010 and 2012, students decreased their consumption of energy drinks and increased their consumption of coffee.
A new type of personal transporter, which made it easier to get around places like a university campuses, became available for purchase.
Consumer price index (CPI) refers to the calculation of weighted average of the consumption basket of all the prices. The value of CPI in the base years is always 100%.
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