Author Question: To define a price index number, decisions about three components are necessary. Name two of those ... (Read 44 times)

darbym82 · **on:** Jul 24, 2018

To define a price index number, decisions about three components are necessary. Name two of those components.

Question 2

Suppose a gallon of gasoline cost 39 cents in 1970, and in 2004 it cost 1.65 . What is the gasoline price index in 2004, using 1970 as the base year? Interpret your answer.

jgranad15 · **Reply #1 on:** Jul 24, 2018

Answer to Question 1

ANY TWO OF THE FOLLOWING ARE OK: 1) THE BASE YEAR OR TIME PERIOD; 2) THE LIST OF GOODS AND SERVICES TO BE INCLUDED; 3) HOW TO WEIGHT THE PARTICULAR GOODS AND SERVICES.

Answer to Question 2

423; GASOLINE IN 2004 COST 423 OF WHAT IT COST IN 1970.