Consider a fictional 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 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table. THE TABLE IS ATTACHED 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 2018 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. A. Energy drinks became increasingly popular on college campuses between 2017 and 2019 due to significant improvements in flavor, but this quality change is hard to measure. B. As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers. C. A new mobile device for personal computing became available for purchase. D. Professors required each student to buy eight textbooks, regardless of the price.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Consider a fictional 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 2017, 2018, and 2019.

The cost of each item in the basket and the total cost of the basket are shown for 2017.

Perform these same calculations for 2018 and 2019, and enter the results in the following table.

**THE TABLE IS ATTACHED**

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 2018 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.

A. Energy drinks became increasingly popular on college campuses between 2017 and 2019 due to significant improvements in flavor, but this quality change is hard to measure.

B. As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.

C. A new mobile device for personal computing became available for purchase.

D. Professors required each student to buy eight textbooks, regardless of the price.

THANK YOU SO MUCH FOR THE HELP!

2017
2018
2019
Price
Cost
Price
Cost
Price
Cost
Quantity in Basket
(Dollars)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
(Dollars
Notebooks
10
30
3
4
Calculators
1
75
75
80
104
Large coffees
300
2
600
2
Energy drinks
75
2
150
4
Textbooks
90
720
110
120
Total cost
1,575
Price index
100

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