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Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college students annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2010, 2011, and 2012.

The cost of each item in the basket and the total cost of the basket are shown for 2010.

Perform these same calculations for 2011 and 2012, and enter the results in the following table.

	Quantity in Basket	2010		2011		2012
		Price	Cost	Price	Cost	Price	Cost
		(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)
Notebooks	10	3	30	3		4
Calculators	1	75	75	80		104
Large sodas	300	2	600	2		2
Energy drinks	75	2	150	4		5
Textbooks	8	90	720	110		120
Total cost			1,575
Price index			100

Suppose the base year for this price index is 2010.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2010 and 2011, the CSPI increased by

. Between 2011 and 2012, the CSPI increased by

.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

Professors required each student to buy eight textbooks, regardless of the price.

A new mobile device for personal computing became available for purchase.

As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.

Energy drinks became increasingly popular on college campuses between 2010 and 2012 due to significant improvements in flavor.

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