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marysya [2.9K]
3 years ago
6

Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie

tickets for $7 each. In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50.(Scenario: Price Index) The price index for the second month is:
(A) 94
(B) 106.4
(C) 100
(D) 101.1
Business
1 answer:
spayn [35]3 years ago
4 0

Answer:

The correct answer is option B.

Explanation:

In the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each.

In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50.

The price index

= \frac{price\ of\ basket\ in\ the\ current\ year}{price\ of\ basket\ in\ the\ base\ year}\ \times\ 100

= \frac{100}{94}\ \times\ 100

= 106.38 or 106.4

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