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Suppose that in 2009, the items in the market basket for our movie price index cost...

Suppose that in 2009, the items in the market basket for our movie price index cost $53.40. Use the information in the chapter to compute the price index for that year. How does the rate of movie price inflation from 2008 to 2009 compare with the rate from 2007 to 2008?

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Answer #1

First off, we have to add the goods of the basket together. It's already calculated to have been $53.40. Then to compute the Consumer Price Index take $53.40 (the total) and divide it by the total of the basket of your base year (in this example a base year was not provided, but its the equivalent to the 53.40. I'll make up an example. We will use the year 2004, and the total of 2004's basket is $40.00. So it will be, 53.40/40.00 = 1.335. Then multiply this number (not matter what) by 100 to calculate the CPI. 1.335*100= 133.5.

133.5 Answer

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