Answer to Question #132385 in Economics of Enterprise for allison

Question

The value of the market basket in the base year is $36,700. How much is the price index in this year?

Answer 1

$Price Index = \frac{Market Basket in the Base year} {Market Basket in the Base year} ×100$

Price Index =$\frac{36,700} {36,700} ×100$

Price Index =100

Price Index for the base year will always be 100 since when dividing the Market Basket in the base year by itself (we get a value of 1) and multiplying by 100 (we get a value of 100).