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Fixed Market Basket Price Index

Fixed Market Basket Price Index. A fixed market basket price index is an index number for the total cost of a fixed collection of goods and services. Instead of looking at one good, you will look at a collection of goods that are consistent over time.

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Fixed Market Basket Price Index

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  1. Fixed Market Basket Price Index

  2. A fixed market basket price index is an index number for the total cost of a fixed collection of goods and services. • Instead of looking at one good, you will look at a collection of goods that are consistent over time.

  3. I live in a cabin and I only buy salt, kerosene, and I hire a professional welder. Here are my purchases in 1990 (my base period). The last column is how much I spent per good/service. The total I spent was $240. I want to find my fixed market number for the year 2000 using the same quantities from 1990.

  4. Here is the chart for 2000 So the total I spent was $360.

  5. So find the index number of that now. • So really that means the cost went up by 50%. • The index number tells us what was the percent increase or decrease of a good/service over time.

  6. Practice Problems • Page 326 # 5.48 (you need to add the oranges to the 1990s total price in order to find the index number). 5.52 • Take about 10 mins to answer then we will study for about 10 mins, and then we will take a short quiz on normal curves, standard scores, and index numbers.

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