Given $∑p_0q_0=800, ∑p_0q_1=1500, ∑p_1q_1= 1300$ and $∑p_1q_0= 900, $ where subscripts 0 and 1 are used for base year and current year respectively. The Paasche's index number is :
Answer & explanation
Correct answer: option 4
Paasche’s price index formula
$P_p=\frac{\sum p_1 q_1}{\sum p_0 q_1}\times100$
Given
$\sum p_1 q_1=1300$
$\sum p_0 q_1=1500$
Substitute
$P_p=\frac{1300}{1500}\times100$
$=\frac{13}{15}\times100$
$=86.67$
Paasche’s index number = 86.67