Question

Suppose the current cost of gasoline is ​$2.58 per gallon. Find the current price index​ number, using the 1975 price of 56.7 cents as the reference value.

Answer 1

Current price index​ number = 455

Explanation:

Given:

Current cost of gasoline = ​$2.58 per gallon

1975 price of gasoline = 56.7 Cents = 56.7 / 100 = $0.567 per gallon

Find:

Current price index​ number = ?

Computation:

Current price index​ number = (Current cost / Reference cost) 100

Current price index​ number = (​$2.58 / $0.567)100

Current price index​ number = (4.55​)100

Current price index​ number = 455