Report

Fixed Market Basket Price Index A fixed market basket price index is an index number for the total cost of a fixed collection of goods and services. Instead of looking at one good, you will look at a collection of goods that are consistent over time. I live in a cabin and I only buy salt, kerosene, and I hire a professional welder. Here are my purchases in 1990 (my base period). The last column is how much I spent per good/service. Good or Service 1990 Quantity 1990 Price 1990 Cost Salt 100 pounds $0.50/pound $50.00 Kerosene 50 gallons 1.00/gallon $50.00 Welding 10 hours 14.00/hour $140.00 The total I spent was $240. I want to find my fixed market number for the year 2000 using the same quantities from 1990. Here is the chart for 2000 Good or Service 1990 Quantity 2000 Price 2000 Cost Salt 100 pounds $0.80/pound $80.00 Kerosene 50 gallons 1.00/gallon $50.00 Welder 10 hours 23.00/hour $230.00 So the total I spent was $360. So find the index number of that now. = 360 240 × 100 = 150 So really that means the cost went up by 50%. The index number tells us what was the percent increase or decrease of a good/service over time. Practice Problems Page 326 # 5.48 (you need to add the oranges to the 1990s total price in order to find the index number). 5.52 Take about 10 mins to answer then we will study for about 10 mins, and then we will take a short quiz on normal curves, standard scores, and index numbers.