Consider a fictional price index, the College Student Index (CSPI), based on a survey of annual purchases of a typical college student. Suppose the following table shows information on the market basket for the CSPI and the prices of each good in 2012, 2013, and 2014.

The cost of each item in the basket and the total cost of the basket are shown for 2012. Perform these same calculations for 2013 and 2014, and enter the results in the table.

Suppose the base year for this price index is 2012. Calculate and enter the value of the CSPI for the remaining years in the last row of the table.

Between 2012 and 2013, the CSPI increased by ___________. Between 2013 and 2014, the CSPI increased by ______________.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstatte inflation in the cost of going to college?

Check all that apply.

Professors requred each student to buy 10 notebooks, regardless of the price.

Energy drinks became increasingly popular on college campuses between 2012 and 2014 due to significant improvements in flavor.

As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their smart phones or on their computers.

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Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Quantity in Basket 10 1 200 100 10 Price ($) 2 50 1 2 100 2012 Cost of Basket ($) 20 50 200 200 1,000 $1,470 100 Price ($) 1 54 1 3 120 2013 Cost of Basket ($) Price ($) 3 75 1 4 150 2014 Cost of Basket ($) Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Quantity in Basket 10 1 200 100 10 Price ($) 2 50 1 2 100 2012 Cost of Basket ($) 20 50 200 200 1,000 $1,470 100 Price ($) 1 54 1 3 120 2013 Cost of Basket ($) Price ($) 3 75 1 4 150 2014 Cost of Basket ($)

Answer rating: 100% (QA)

Quantity in Basket 2012 2013 2014 Price Cost of Basket Price Cost of Basket P... View the full answer