Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Suppose this price index uses 2020 as the base year. Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) 1 64 64 104 150 2 300 2 10 800 85 8 16 2 40 120 4 80 Between 2020 and 2021, the UPI increased by 2020 8 ~ M 2021 1,300 100 In the last row of the table, calculate and enter the value of the UPI for the remaining years. 104 300 850 16 160 1,430 110 10%. Between 2021 and 2022, the UPI increased by Price (Dollars) 134 2 105 4 5 32% 2022 Cost (Dollars) 134 300 1,050 32 200 1,716 132

Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Suppose this price index uses 2020 as the base year. Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) 1 64 64 104 150 2 300 2 10 800 85 8 16 2 40 120 4 80 Between 2020 and 2021, the UPI increased by 2020 8 ~ M 2021 1,300 100 In the last row of the table, calculate and enter the value of the UPI for the remaining years. 104 300 850 16 160 1,430 110 10%. Between 2021 and 2022, the UPI increased by Price (Dollars) 134 2 105 4 5 32% 2022 Cost (Dollars) 134 300 1,050 32 200 1,716 132

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Calculating inflation using a simple price index
Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute.
The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022.
The cost of each good in the basket as well as the basket's total cost are given for 2020.
Perform these same calculations for 2021 and 2022, and enter the results in the following table.
Streaming services
Iced coffees
Textbooks
Notebooks
Energy drinks
Total cost
Price index
Quantity in Basket
1
150
10
8
40
Suppose this price index uses 2020 as the base year.
Price
(Dollars)
64
2
Between 2020 and 2021, the UPI increased by
80
2
2020
3
Cost
(Dollars)
64
300
800
16
120
1,300
100
Price
(Dollars)
104
2
85
2
4
2021
Cost
(Dollars)
In the last row of the table, calculate and enter the value of the UPI for the remaining years.
104
300
850
16
160
1,430
110
10% Between 2021 and 2022, the UPI increased by
Price
(Dollars)
134
2
105
4
5
32%
2022
Cost
(Dollars)
134
300
1,050
32
200
1,716
132

Which of the following, if true, would illustrate why price indexes such as the UPI might overstate inflation in the cost of going to college? Check all
that apply.
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.
Professors required each student to buy 10 textbooks, regardless of the price.
A natural dietary supplement is developed that is clinically proven to safely boost memory.
The quality of content provided by streaming services improved dramatically from 2020 to 2022. Many companies invested heavily in the
actors cast for their original series, but this quality change is hard to measure.

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