the cost of a nations market basket in the base year is $1,360, and the current years price index equals…

the cost of a nations market basket in the base year is $1,360, and the current years price index equals 130. what is the cost of the market basket in the current year? the cost of the market basket in the current year is $□. (enter your response as a whole number.)

the cost of a nations market basket in the base year is $1,360, and the current years price index equals 130. what is the cost of the market basket in the current year? the cost of the market basket in the current year is $□. (enter your response as a whole number.)

Answer

Explanation:

Step1: Recall price - index formula

The formula for the price index is $Price\ index=\frac{Cost\ of\ market\ basket\ in\ current\ year}{Cost\ of\ market\ basket\ in\ base\ year}\times100$.

Step2: Rearrange the formula to solve for the cost of the market basket in the current year

Let $C_{c}$ be the cost of the market basket in the current year and $C_{b}$ be the cost of the market basket in the base - year, and $PI$ be the price index. Then $PI=\frac{C_{c}}{C_{b}}\times100$, and $C_{c}=\frac{PI\times C_{b}}{100}$.

Step3: Substitute the given values

We know that $C_{b} = 1360$, $PI = 130$. So $C_{c}=\frac{130\times1360}{100}$. First, calculate $130\times1360 = 176800$. Then $\frac{176800}{100}=1768$.

Answer:

1768