Problem 1: Below is information on food items for the years 2000 and 2004.
| |
2000 |
2004 |
| Item |
Price |
Quantity |
Price |
Quantity |
| Margarine (pound) |
$0.81 |
18 |
$0.89 |
27 |
| Shortening (pound) |
0.84 |
5 |
0.94 |
9 |
| Milk (1/2 gallon) |
1.44 |
70 |
1.43 |
65 |
| Potato chips |
2.91 |
27 |
3.07 |
33 |
a. Compute a simple price index for each of the four items. Use 2000 as the base period.
b. Compute a simple aggregate price index. Use 2000 as the base period.
Problem 2
Betts Electronics purchases three replacement parts for robotic machines used in their manufacturing process. Information on the price of the replacement parts and the quantity purchased is given below.
| |
Price |
Quantity |
| Part |
2000 |
2004 |
2000 |
2004 |
| RC-33 |
$0.50 |
$0.60 |
320 |
340 |
| SM-14 |
1.2 |
0.9 |
110 |
130 |
| WC50 |
0.85 |
1.00 |
230 |
250 |
a. Compute a simple price index for each of the three items. Use 2000 as the base period.
b. Compute a simple aggregate price index for 2004. Use 2000 as the base period.