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 2010, 2011, and 2012.

The expenditure on each item in the market basket and the total dollar expenditure on market basket are shown for 2010.

Perform these same calculations for 2011 and 2012, and enter the results in the following table.

Quantity in Market Basket2010

2011

2012

PriceExpenditurePriceExpenditurePriceExpenditure(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)Notebooks1033034Calculators1757580104Large coffees300260022Energy drinks75215045Textbooks890720110120Total cost1,575Price index100Suppose the base year for this price index is 2010.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2010 and 2011, the CSPI increased by. Between 2011 and 2012, the CSPI increased by.