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Chapter: Index Numbers· Economics

Observe the following table and answer the questions given below it:CommoditiesPrices in 2006 (in ₹) (Base Year) \(P_0\)Prices in 2019 (in ₹) (Current Year) \(P_1\)A2030B3045C4060D5075E6090Questions:(1) Write the formula for calculation of price inde…

Q.5 (i) Observe the following table and answer the questions given below it:

CommoditiesPrices in 2006 (in ₹) (Base Year) \(P_0\)Prices in 2019 (in ₹) (Current Year) \(P_1\)
A2030
B3045
C4060
D5075
E6090

Questions:
(1) Write the formula for calculation of price index. (1)
(2) Find the value of \(\sum P_0\) and \(\sum P_1\). (1)
(3) Find the price index \(P_{01}\). (2)

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Answer: (1) \(P_{01} = \dfrac{\sum P_1}{\sum P_0}\times 100\); (2) \(\sum P_0 = 200\), \(\sum P_1 = 300\); (3) \(P_{01} = 150\)

(1) Simple aggregative method: \(P_{01} = \dfrac{\sum P_1}{\sum P_0}\times 100\)

(2) \(\sum P_0 = 20+30+40+50+60 = 200\)
\(\sum P_1 = 30+45+60+75+90 = 300\)

(3) \(P_{01} = \dfrac{300}{200}\times 100 = 150\)

Prices in 2019 rose by 50% compared with the base year 2006.

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