The following are simple price indices for a commodity: Year 2017 2018 2019 Price index (2017 = 100) 100 108.60 127.10 Price index (2018 = 100) 100 Based on the above information, calculate the simple price index for 2017 using 2018 as a new base year. Round your final answer to two decimal places.
Question
The following are simple price indices for a commodity: Year 2017 2018 2019 Price index (2017 = 100) 100 108.60 127.10 Price index (2018 = 100) 100 Based on the above information, calculate the simple price index for 2017 using 2018 as a new base year. Round your final answer to two decimal places.
Solution
To calculate the simple price index for 2017 using 2018 as a new base year, you need to follow these steps:
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Identify the price index for the base year. In this case, the base year is 2018 and the price index is 100.
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Identify the price index for the year you want to calculate. In this case, it's 2017 and the price index is 108.60 (using 2017 as the base year).
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Divide the price index of the year you want to calculate by the price index of the base year.
So, the calculation would be:
(100 / 108.60) * 100 = 92.08
So, the simple price index for 2017 using 2018 as a new base year is 92.08 (rounded to two decimal places).
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