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    Creating a price index

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    Create a price index for Green Bay Packer fans using the following basket of goods with 1997 prices as the base year.

    Quantities Prices
    In 1997 1997 1998

    90 lbs of cheese $2.50/lb $2.0/lb
    12 flannel shirts $15/shirt $20/shirt
    16 football tickets $25/ticket $30/ticket

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    Solution Preview

    Total value of given basket of goods at 1997 prices=90*2.50+12*15+16*25=$805
    Total value of given basket of goods at 1998 ...

    Solution Summary

    Solution describes the steps to create a price index in the given case.