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Index Numbers

Question

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Calculate weighted aggregative price index from the following table using Laspeyre’s method and (ii) Paasche’s method.

Base Period of

Base Period of

Commodity

Price

Quantity

Price

Quantity

A

2

10

4

5

B

5

12

6

10

C

4

20

5

15

D

2

15

3

10

Solution

Commodity	Price	Quantity (Q₀)	Price	Quantity	PoQo	P₁Q₀
A	2	10	4	5	20	40
B	5	12	6	10	60	72
C .	4	20	5	15	80	100
D	2	15	3	10	30	45
					Σ P₀Q₀ = 190	Σ P₀Q₀ = 257

(i) Laspeyre’s Method

(ii) Paasche’s Method

Some More Questions From Index Numbers Chapter

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?

Is the change in any price reflected in price index number?

Can the CPI for urban non-manual employees represent the changes in the cost of living of the President of India?

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