Question 1. The price of an item was $200 in 19X4 and $220 in 19X5. Calculate a simple price index for this item using 19X4 as the base year.
Question 2. You are searching for a Government price index to use in estimating the price of an industrial chemical product. You have price data from 12 months ago. Would the Consumer Price Index (CPI) or a Producer Price Index (PPI) be the better choice for you to use? Why?
Question 3. An item cost $250 each 8 months ago. The relevant index was 110.0 at that time. Today the index is 115.5. Estimate the item's price today.