Suppose that a hypothetical healthcare inflation index, HCI, iscomputed by weighting three items as follows:...

Suppose that a hypothetical healthcare inflation index, HCI, is computed by weighting three items as follows: "insurance premiums" is weighted at ?1=50%, and "medical products" and "medical services" are each weighted at ?2=?3=25%. Suppose that insurance premiums are growing at is 4% per year, and the annual inflation rate of medical products and medical services is 1% and 2%, respectively.

What is the annual inflation rate of HCI? (Note: Your answer should be a number in percentage form. Do not enter '%').

Solutions

Expert Solution

the annual inflation rate of HCI = weighted average inflation = ?1 x g1 + ?2 x g2 + ?3 x g3 = 50% x 4% + 25% x 1% + 25% x 2% = 2.75%

Please enter 2.75 in the answer box. Plese do round it off as per your requirement before entering the answer in the answer box.

jeff jeffy answered 2 years ago

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