Question no 1

8. 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 lnformatl'on on the market basket for the CSPI and the prlces of each of the goods in 2010, 2011, and 2012. The cost of each item in the basket and the total cost of the basket are shown for 2010. Assume the quantity.r of each item in the basket does not change in 2011 and 2012. Perform these same calculations for 2011 and 2012, and enter the results ln the follo wlog table. 2010 201 1 2012 Price Cost Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) Notebooks 8 2 16 2 E 4 E Calculators 1 64 64 104 E 134 E Large coees 150 2 300 2 E 2 E Energy drinks 40 3 120 4 E 5 E Textbooks 1o 80 800 85 E 105 E Total cost 1,300 \\:l S Price index 100 E E