1. Calculating inflation using a simple price indexConsider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases, Suppose the followingtable shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021.The cost of each item in the basket and the total cost of the basket are shown for 2019.Perform these same calculations for 2020 and 2021, and enter the results in the following table.NotebooksCalculatorsLarge coffeesEnergy drinksTextbooksTotal costPrice indexQuantity in Basket81150401055Price(Dollars)264280552019Suppose the base year for this price index is 2019.Cost(Dollars)163001208001,300100Price(Dollars)210424552020Cost(Dollars)Price(Dollars)4134.25105552021Cost(Dollars) In the last row of the table, calculate and enter the value of the CSPI for the remaining years.%. Between 2020 and 2021, the CSPI increased byWhich 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 allthat apply.Between 2019 and 2020, the CSPI increased by%The quality of textbooks increased dramatically from 2019 to 2021, with textbook companies bundling new online study aids with theirbooks.As the price of energy drinks increased relative to the price of coffee between 2019 and 2021, students decreased their consumption ofenergy drinks and increased their consumption of coffee.Professors required each student to buy eight notebooks, regardless of the price.A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase.

Cost is the product of price and the quantity. The calculated values of cost are as…

Answered: Consider a fictional price index, the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The market price of pizzas in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because several new pizza parlors have recently opened in the area. Other students attribute the decrease in the price of pizzas to a recent decrease in the price of hamburgers at local burger joints. Everyone agrees that the decrease in the price of hamburgers was caused by a recent decrease in the price of ground beef, which is not generally used in making pizzas. Assume that pizza parlors and burger joints are entirely separate entities-that is, there aren't places that serve both pizzas and hamburgers. The first group of students thinks the decrease in the price of pizzas is due to the fact that several new pizza parlors have recently opened in the area. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of…
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A Hershey Bar with 4 almonds sells for $1 in 2018. The same size Hershey Bar now has 3 almonds and still sells for $1. In real terms the price of the Hershey Bar

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