Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021.The cost of each item in the basket and the total cost of the basket are shown for 2019.Perform these same calculations for 2020 and 2021, and enter the results in the following table. Quantity in Basket201920202021PriceCostPriceCostPriceCost(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)Notebooks103303 4 Calculators1757580 104 Large coffees30026002 2 Energy drinks7521504 5 Textbooks890720110 120 Total cost551,5755 5 Price index551005 5 Suppose the base year for this price index is 2019.In the last row of the table, calculate and enter the value of the CSPI for the remaining years.Between 2019 and 2020, the CSPI increased by . Between 2020 and 2021, the CSPI increased by Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.Professors required each student to buy 10 notebooks, regardless of the price. Energy drinks became increasingly popular on college campuses between 2019 and 2021 due to significant improvements in flavor. A new mobile device for personal computing became available for purchase. As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers. In the last row of the table, calculate and enter the value of the CSPI for the remaining years.Between 2019 and 2020, the CSPI increased by%. Between 2020 and 2021, the CSPI increased by%Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check allthat apply.Professors required each student to buy 10 notebooks, regardless of the price.Energy drinks became increasingly popular on college campuses between 2019 and 2021 due to significant improvements in flavor.A new mobile device for personal computing became available for purchase.As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or ontheir computers. 1. Calculating inflation using a simple price indexConsider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the followingtable shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021.The cost of each item in the basket and the total cost of the basket are shown for 2019.Perform these same calculations for 2020 and 2021, and enter the results in the following table.NotebooksCalculatorsLarge coffeesEnergy drinksTextbooksTotal costPrice indexQuantity in Basket10130075855Price(Dollars)3752290552019Suppose the base year for this price index is 2019.Cost(Dollars)30756001507201,575100Price(Dollars)38024110552020Cost(Dollars)Price(Dollars)410425120552021Cost(Dollars)

Question

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021.The cost of each item in the basket and the total cost of the basket are shown for 2019.Perform these same calculations for 2020 and 2021, and enter the results in the following table. Quantity in Basket201920202021PriceCostPriceCostPriceCost(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)(Dollars)Notebooks103303 4 Calculators1757580 104 Large coffees30026002 2 Energy drinks7521504 5 Textbooks890720110 120 Total cost551,5755 5 Price index551005 5  Suppose the base year for this price index is 2019.In the last row of the table, calculate and enter the value of the CSPI for the remaining years.Between 2019 and 2020, the CSPI increased by . Between 2020 and 2021, the CSPI increased by Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.Professors required each student to buy 10 notebooks, regardless of the price. Energy drinks became increasingly popular on college campuses between 2019 and 2021 due to significant improvements in flavor. A new mobile device for personal computing became available for purchase. As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers. In the last row of the table, calculate and enter the value of the CSPI for the remaining years.Between 2019 and 2020, the CSPI increased by%. Between 2020 and 2021, the CSPI increased by%Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check allthat apply.Professors required each student to buy 10 notebooks, regardless of the price.Energy drinks became increasingly popular on college campuses between 2019 and 2021 due to significant improvements in flavor.A new mobile device for personal computing became available for purchase.As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or ontheir computers. 1. Calculating inflation using a simple price indexConsider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the followingtable shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021.The cost of each item in the basket and the total cost of the basket are shown for 2019.Perform these same calculations for 2020 and 2021, and enter the results in the following table.NotebooksCalculatorsLarge coffeesEnergy drinksTextbooksTotal costPrice indexQuantity in Basket10130075855Price(Dollars)3752290552019Suppose the base year for this price index is 2019.Cost(Dollars)30756001507201,575100Price(Dollars)38024110552020Cost(Dollars)Price(Dollars)410425120552021Cost(Dollars)

Accepted Answer

CSPI stands for College Student Price Index. 
It is a price index. 
There is a market basket that…

	Quantity in Basket	2019	2020	2021
Price	Cost	Price	Cost	Price	Cost
(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)
Notebooks	10	3	30	3		4
Calculators	1	75	75	80		104
Large coffees	300	2	600	2		2
Energy drinks	75	2	150	4		5
Textbooks	8	90	720	110		120
Total cost	5	5	1,575	5		5
Price index	5	5	100	5		5