Based on the given costs at the end of each year, the price index for all given years are:
- 2006 = 100.
- 2007 = 120.
- 2008 = 132.
What are the price indexes?
This can be found by the formula:
= Total cost in current year / Total cost in base year x 100
2006 is the base year.
Price index in 2006:
= 1,575 / 1,575 x 100
= 100
Price index in 2007:
= 1,890 / 1,575 x 100
= 120
Price index in 2008:
= 2,079 / 1,575 x 100
= 132
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