Question

We are calculating the Orr Price Index which consists of a basket of goods that includes 4 pounds of apples, 3 pounds of chicken, 2 cotton t-shirts, and 1 pair of blue jeans.

Prices in 2015: Apples are $1/pound; chicken is $5.00/pound; cotton t-shirts are $15.00; and, blue jeans cost $25.00.

Prices in 2019: Apples cost $1.25 pound; chicken costs $4.50 per pound; cotton t-shirts cost $18.00; and blue jeans cost $30.00.

1. Calculate the OrrPI for 2015, using 2015 as the base year.

Calculate the OrrPI for 2019, using 2015 as the base year.

Answer 1