|
Q. 4. We are interested in measuring how the
prices of certain commodities have changed during
previous years:(Dec. 2000, June
2000)
| Commodity
|
Units of purchase
|
Typical annual consumption
|
Price
|
|
1995
|
2000
|
| Pen
|
12 piece
|
4 |
60 |
75 |
| Board
Pen |
6 piece
|
1/2 |
72 |
92 |
| Registers
|
1 box
|
1 |
950 |
1100 |
| Aspirin
|
1 pack
|
6 |
59 |
75 |
| Total
|
|
|
1141
|
1342
|
Calculate index numbers for year 2000 by taking
1995 as base year by Weighted Average of Relatives
Indexes (or Method of Weighted Relatives).
Solution.
| Commodity |
p0
(Rs) |
q0
(Kg) |
p1
(Rs) |
p0 X
q0
(W) |
[(p1/p0)
X 100]
(P) |
P X W |
|
Pen |
60 |
4 |
75 |
240
|
125
|
30000
|
|
Board Pen |
72 |
1/2
|
92 |
36
|
127.8
|
4600.8
|
|
Registers |
950
|
1 |
1100
|
950
|
115.8
|
110010
|
|
Aspirin |
59 |
6 |
75 |
354
|
127.1
|
44993.4
|
|
Total |
1141
|
|
1342
|
å
W = 1580 |
|
å
PW = 189604.2 |
Cost of living index number = å
PW/å W
or Cost of living index number =
189604.2/1580 = 120
Therefore, cost of living index number for the year
2000 is 120.
|
