Many factors influence the retail price of computers. The table below shows the average retail price for a computer, including both desktops and laptops, during the month of November for each of the indicated years (Wall Street Journal, December 13, 2010).
Year | Average Price ($) |
2007 | 795 |
2008 | 705 |
2009 | 580 |
2010 | 615 |
- a. Use 2007 as the base year and develop a price index for the retail price of a computer over this four-year period.
- b. Use 2008 as the base year and develop a price index for the retail price of a computer over this four-year period.
a.
Find the price index for the retail price of a computer over the four-year period by using 2007 as the base year.
Answer to Problem 17SE
The price index for the retail price of a computer over the four-year period by using 2007 as the base year is,
Year | Average Price ($) | |
2007 | 795 | 100 |
2008 | 705 | 88.679 |
2009 | 580 | 72.956 |
2010 | 615 | 77.3585 |
Explanation of Solution
Calculation:
The data represents the values of average retail price for a computer in the month of November for each year from 2007 to 2010.
The price index for the retail price of a computer over the four-year period by using 2007 as the base year is obtained below:
Year | Average Price ($) | |
2007 | 795 | |
2008 | 705 | |
2009 | 580 | |
2010 | 615 |
b.
Find the price index for the retail price of a computer over the four-year period by using 2008 as the base year.
Answer to Problem 17SE
The price index for the retail price of a computer over the four-year period by using 2008 as the base year is,
Year | Average Price ($) | |
2007 | 795 | 112.766 |
2008 | 705 | 100 |
2009 | 580 | 82.2695 |
2010 | 615 | 87.234 |
Explanation of Solution
Calculation:
The price index for the retail price of a computer over the four-year period by using 2008 as the base year is obtained below:
Year | Average Price ($) | |
2007 | 795 | |
2008 | 705 | |
2009 | 580 | |
2010 | 615 |
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Chapter 20 Solutions
EBK STATISTICS FOR BUSINESS & ECONOMICS
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