Answer :
Final answer:
The price index in 2022 based on the fixed basket of goods is calculated by dividing the cost in 2022 by the cost in 2018 and multiplying by the price index in 2018. Using this method, the price index in 2022 is found to be 159.
Explanation:
To calculate the price index in 2022 based on the fixed basket of goods, we use the information that the price of the fixed basket of goods was $500 in 2018 and $530 in 2022. The price index in 2018 was 150. We assume the year 2018 serves as the base year for the price index (index value of 150). The price index formula is calculated by taking the cost of the basket in the current year, dividing it by the cost in the base year, and then multiplying the result by the base year's index value.
The formula is:
Price Index in 2022 = (Cost in 2022 / Cost in 2018) × Price Index in 2018
Plugging in the values we have:
Price Index in 2022 = ($530 / $500) × 150 = 1.06 × 150
Thus, the price index in 2022 is:
Price Index in 2022 = 159
Therefore, the correct answer is c. 159.
