Refer to the information provided in Table 22.5 below to answer the question(s) that follow.
Table 22.5
-Refer to Table 22.5 If 2014 is the base year, the price index in 2016 is
A) 81.2.
B) 86.8.
C) 118.8.
D) 123.2.

Question

Refer to the information provided in Table 22.5 below to answer the question(s) that follow.
Table 22.5 
-Refer to Table 22.5 If 2014 is the base year, the price index in 2016 is
A) 81.2. 
B) 86.8. 
C) 118.8. 
D) 123.2.

Quizplus · Accepted Answer

To calculate the price index for a certain year, divide the cost of the market basket in that year by the cost of the same market basket in the base year (2014 in this case) and multiply by 100. For 2016, the cost of the market basket is $160 + $80 + $40 + $60 + $25 = $365. The cost of the same market basket in 2014 is $125 + $100 + $50 + $50 + $20 = $345. Therefore, the price index for 2016 is ($365 / $345) x 100 = 123.2.

Refer to the Information Provided in Table 22