The formula for computing a basic price index is
A) (cost of market basket today/cost of market basket in base year) × 100.
B) (cost of market basket in base year/100) × cost of market basket today.
C) (cost of market basket in base year/cost of market basket today) × 100.
D) (100/cost of market basket in base year) + cost of market basket today.

Question

Quizplus · Accepted Answer

The formula for computing a basic price index is to divide the cost of a market basket today by the cost of the same market basket in the base year and then multiply the result by 100. This gives the percentage change in the cost of the market basket over time. Option A represents this formula accurately.

The Formula for Computing a Basic Price Index Is