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Index Numbers

Question

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Calculate index number using Paasche’s method. (Annual Examination 2011)

Commodities

Year2005

Year2006

Price

Quantity

Price

Quantity

A

2

8

4

6

B

5

10

6

5

C

4

14

5

10

D

2

19

2

13

Solution

Commodities	Year		Year
	Price P₀	Quantity (Q₀)	Price (P₁)	Quantity (Q₁)	P₁Q₁	P₀Q₁
A	2	8	4	6	24	12
B	5	10	6	5	30	25
C	4	14	5	10	50	40
D	2	19	2	13	26	26
					ΣP₁Q₁ = 130	ΣP₀Q₁ = 103

Index Number (ByPaasch'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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