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    Compute a simple price index for each of the three items

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    Please answer questions (see attachment):

    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
    1. Compute a simple price index for each of the four items. Use 2000 as the base period.

    2. Compute a simple aggregate price index. Use 2000 as the base period.

    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 1.20 0.90 110 130
    WC50 0.85 1.00 230 250

    1. Compute a simple price index for each of the three items. Use 2000 as the base period.

    2. Compute a simple aggregate price index for 2004. Use 2000 as the base period.

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    https://brainmass.com/business/accounting/compute-simple-price-index-items-218252

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    Solution Summary

    The solution computes a simple price index for each of the given three items.

    $2.19

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