Question

 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 2017, 2018, and 2019.

 The cost of each item in the basket and the total cost of the basket are shown for 2017.

 Perform these same calculations for 2018 and 2019, and enter the results in the following table.

Answer 1

	Quantity of Basket	2017	2018	2019
		Price	Cost	Price	Cost	Price	Cost
Notebooks	10	2	20	1	10	3	30
Calculator	1	50	50	54	54	75	75
Large Coffees	200	1	200	1	200	1	200
Energy Drinks	100	2	200	3	300	4	400
Text Books	10	100	1000	120	1200	150	1500
Total Cost			1470		1764		2205
Price Index			100		(1764 / 1470 * 100) = 120		(2205 / 1470 * 100) = 150