Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 cds for $13 each, and 4 movie tickets for $7 each. in the next month, the price of gasoline is $2.25 per gallon, cds cost $12.50 each, and the price of a movie ticket is $7.50.(scenario: price index) the price index for the second month is:

(a) 94
(b) 106.4
(c) 100
(d) 101.1

The correct answer is option B.

Explanation:

In the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie tickets for $7 each.

In the next month, the price of gasoline is $2.25 per gallon, CDs cost $12.50 each, and the price of a movie ticket is $7.50.

The price index

=

=

= 106.38 or 106.4

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