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Computing the simple price index

Problem: Below is information on food items for the years 2000 and 2004.

	2000		2004
Item	Price	Quantity	Price	Quantity
Margarine (pound)	$ 0.81	18	$ 0.89	27
Shortening (pound)	$ 0.84	5	$ 0.94	9
Milk (1/2 gallon)	$ 1.44	70	$ 1.43	65
Potato chips	$ 2.91	27	$ 3.07	33

Q1. Compute a simple price index for each of the four items. Use 2000 as the base period.

Q2. Compute a simple aggregate price index. Use 2000 as the base period.

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