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Index Numbers

Question

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The monthly per capita expenditure incurred by workers for an industrial centre during 1980 and 2005 on the following items are given below. The weights of these items are 75, 10, 5, 6, and 4, respectively. Prepare a weighted index number for cost of living for 2005 with 1980 as the base.

Items

Price in 1980

Price in 2005

Food

100

200

Clothing

20

25

Fuel and lighting

15

20

House Rent

30

40

Misc.

35

65

Solution

Items	W	Price in 1980	Price in 2005		WR
Food	75	100	200	200	15000
Clothing	10	200	25	125	1250
Fuel and lighting	5	15	20	133.33	666.65
House Rent	6	30	40	133.37	800.72
Misc.	4	35	65	185.7	742.84
	ΣW = 100				18459.71

Some More Questions From Index Numbers Chapter

The impact of change in the price of a commodity with little weight in the index will be:

A consumer price index measures changes in:

The item having the highest weight in consumer price index for industrial workers is:

In general, inflation is calculated by using:

The item having the highest weight in consumer’s price index for industrial workers is:

consumer price index measures changes in:

The wholesale price index.

D.A. paid to the workers is based on:

Why do we need an index number?

Why is it essential to have different CPIs for different categories of consumers?

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