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Betts Electronics

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** Please see the attached problems on calculating the price index. **

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.

Solution Preview

Please see ** ATTACHED ** file(s) for complete solution and details!!

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
\$6.00 \$6.33

a. Compute a simple price index for each of ...

Solution Summary

This solution is comprised of a detailed explanation to answer

\$2.19