ulating inflation using a simple price index ra fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following ows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021. t of each item in the basket and the total cost of the basket are shown for 2019. these same calculations for 2020 and 2021, and enter the results in the following table. books alators coffees ay drinks books cost index Price Quantity in Basket (Dollars) 10 5 1 100 1 2 100 150 50 10 5 5 5 5 e the base year for this price index is 2019. in 2019 and 2020, the CSPI increased by 2019 Cost (Dollars) 50 100 150 100 1,000 1,400 100 Price (Dollars) 7 110 1 3 120 5 5 2020 Cost (Dollars) ast row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 11 140 1 4 150 5 5 %. Between 2020 and 2021, the CSPI increased by 2021 Professors required each student to buy 10 notebooks, regardless of the price. Cost (Dollars) 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 f 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 ply. A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase. As the price of energy drinks increased relative to the price of coffee between 2019 and 2021, students decreased their consumption of energy drinks and increased their consumption of coffee. The quality of textbooks increased dramatically from 2019 to 2021, with textbook companies bundling new online study aids with their books.
ulating inflation using a simple price index ra fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following ows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021. t of each item in the basket and the total cost of the basket are shown for 2019. these same calculations for 2020 and 2021, and enter the results in the following table. books alators coffees ay drinks books cost index Price Quantity in Basket (Dollars) 10 5 1 100 1 2 100 150 50 10 5 5 5 5 e the base year for this price index is 2019. in 2019 and 2020, the CSPI increased by 2019 Cost (Dollars) 50 100 150 100 1,000 1,400 100 Price (Dollars) 7 110 1 3 120 5 5 2020 Cost (Dollars) ast row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 11 140 1 4 150 5 5 %. Between 2020 and 2021, the CSPI increased by 2021 Professors required each student to buy 10 notebooks, regardless of the price. Cost (Dollars) 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 f 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 ply. A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase. As the price of energy drinks increased relative to the price of coffee between 2019 and 2021, students decreased their consumption of energy drinks and increased their consumption of coffee. The quality of textbooks increased dramatically from 2019 to 2021, with textbook companies bundling new online study aids with their books.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:1. Calculating inflation using a simple price index
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 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.
Notebooks
Calculators
Large coffees
Energy drinks
Textbooks
Total cost
Price index
Price
Cost
Price
Quantity in Basket (Dollars) (Dollars) (Dollars)
10
15
50
7
1
100
100
150
1
150
50
2
100
10
100
1,000
5
5
5
5
Suppose the base year for this price index is 2019.
Between 2019 and 2020, the CSPI increased by
2019
1,400
100
110
1
3
120
5
5
2020
Cost
(Dollars)
In the last row of the table, calculate and enter the value of the CSPI for the remaining years.
Price
(Dollars)
11
140
1
4
150
5
5
%. Between 2020 and 2021, the CSPI increased by
2021
Cost
(Dollars)
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
Professors required each student to buy 10 notebooks, regardless of the price.
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 new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase.
As the price of energy drinks increased relative to the price of coffee between 2019 and 2021, students decreased their consumption of
energy drinks and increased their consumption of coffee.
The quality of textbooks increased dramatically from 2019 to 2021, with textbook companies bundling new online study aids with their
books.
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