CHAPTER 9 – Index Numbers

Q1
Solution:
Goods Base Year (2010) Year (2015)
Base year Cost (Po) Current year Cost (Pi)
Potato 100/Kg 500/Kg
Tomato 400/Kg 250/Kg
Onion 200/Kg 400/Kg
Oil 4/litre 5/litre
Fabric 2/meter 3/meter
∑ 𝑃𝑜 = 702 ∑ 𝑃𝑖 = 928

∑ 𝑃𝑖
Index number of current-year w.r.t. base year is Poi = ∑ 𝑃𝑜
× 100
928
Poi = × 100 = 1.321 × 100 = 132.1 ~ 132
702

Q2
Solution:
Items Prices of year 2011 Prices of year 2016
(Base Year) (Po) (Current Year) (Pi)
P 220 250
Q 50 80
R 370 500
S 110 130
T 70 72
U 90 100
∑ 𝑃𝑜 = 910 ∑ 𝑃𝑖 = 1132

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 ∑ 𝑃𝑖
Index number of current-year w.r.t. base year is Poi = ∑ 𝑃𝑜
× 100
1132
Poi = × 100 = 1.243 × 100 = 124.3
910

Q3
Solution:
Prepare an index number for 2014 on the basis of 2010 from the
below data using aggregate expenditure method.
Particulars Quantity Base Year (2010) Current year (2014)
(Kg)
Article Qo Base PoQo Current PiQ0
Year Year Price
Price (Pi)
(Po)
G 9 21 189 25 225
H 6 20 120 22 132
I 4 19 76 23 92
J 3 9 27 10 30
K 3 5 15 9 27
∑ 𝑃𝑜 𝑄𝑜 ∑ 𝑃𝑖 𝑄𝑖
= 427 = 506

∑ 𝑃𝑖
Index number of current-year w.r.t. base year is Poi = ∑ 𝑃𝑜
× 100
506
Poi = × 100 = 1.185 × 100 = 118.5
427

Q4
Solution:
Family Quant Base Year Current year 𝑃𝑜
R = × RPoQo
𝑃𝑖
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Budget ity 100
(Heads) (Kg)
Qo Bas PoQo Curr PiQ0
e ent
Ye Year
ar Price
Pri (Pi)
ce
(Po
)
Rent 45 200 9000 225 10125 88.8 799200
Food 20 300 6000 350 7000 85.7 514200
Clothing 8 150 1200 175 1400 85.7 685
Fuel 10 100 1000 110 1100 90.9 1909
Miscellan 17 200 3400 250 4250 80 1360
eous
∑ 𝑃𝑜 𝑄𝑜 ∑ 𝑃𝑖 𝑄𝑖 ∑ 𝑅PoQo=
1317354
= 20600 = 23875

∑ 𝑅𝑃𝑜 𝑄𝑜
Index number of current-year w.r.t. base year is Poi = ∑ 𝑃𝑜 𝑄𝑜
× 100
1317354
Consumer Price Index = Poi = = 63.94
20600

Q5
Solution:
Items Base year (2010) Current Year (2015) Relative Price
Price (Po) Price (Pi) 𝑃𝑜
× 100
𝑃𝑖
A 20 30 66.6
B 40 50 80
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C 50 70 71.4
D 70 90 77.7
𝑃𝑜
∑ × 100
𝑃𝑖
= 295.7
𝑃
∑ 𝑜 ×100
𝑃𝑖 295.7
Simple average of relative prices = = = 73.925
𝑁 4

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