Page 144 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

Chapter 9

Question 4

Simple price index

Express a price of $99 in 2015 as an index with a base of 2012 when the price
was $80.

Price in any given year P 1
Price Index = × 100 = × 100
Price in base year P 0

2015 index = $99/$80 × 100 = 123.75

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