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Index Numbers

Question

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Construct consumer price index number with the help of following data. The weights of these items are 35,10,20,15, 20, respectively.

Items

Base year Price (Rs.)

Current Year Price

Food

150

145

Fuel

25

23

Cloth

75

65

Rent

30

30

Miscellaneous

40

45

Solution

Items	Weight in % W	Base Period Price (Rs.)	Current Period price (Rs.)	R = P/P_oxl00 (in%)	WR
Food	35	150	145	96.67	3883.45
Fuel	10	25	23	92.00	920.00
Cloth	20	75	65	86.67	1733.40
Rent	15	30	30	100.00	1500.00
Miscellaneous	20	40	45	112.50	2250.00
	ΣW = 100			ΣWR = 9786.85

It means that the cost of living has decreased by 2.14 (100-97.86) percent.

Some More Questions From Index Numbers Chapter

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?

What does a consumer price index for industrial workers measure?

What is the difference between a price index and a quantity index?

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