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Retail prices of food items. In 1990, the average weekly
Chapter 14, Problem 60SE(choose chapter or problem)
Retail prices of food items. In 1990, the average weekly food cost for a suburban family of four was estimated to be $154.40. The table below presents the retail prices of four food items for selected years from 1990 to 2010. Assume a typical suburban family of four purchased the following quantities of food, on average, each week during 1990:
a. Calculate a Laspeyres price index for 1990 to 2010, using 1990 as the base year.
b. According to your index, how much did the above “basket” of foods increase or decrease in price from 1990 to 2010?
Questions & Answers
QUESTION:
Retail prices of food items. In 1990, the average weekly food cost for a suburban family of four was estimated to be $154.40. The table below presents the retail prices of four food items for selected years from 1990 to 2010. Assume a typical suburban family of four purchased the following quantities of food, on average, each week during 1990:
a. Calculate a Laspeyres price index for 1990 to 2010, using 1990 as the base year.
b. According to your index, how much did the above “basket” of foods increase or decrease in price from 1990 to 2010?
ANSWER:Step 1 of 3
(a)
Compute the Laspeyres index by using the formula given below:
Where,
