From the following compute price index by using simple average of price relatives:
| Commodities and unit | Price in 2009 (₹) | Price in 2010 (₹) |
| Butter (kg) | 20.00 | 21.00 |
| Cheese (kg) | 15.00 | 14.00 |
| Milk(kg) | 3.00 | 3.00 |
| Bread (1) | 2.80 | 2.80 |
| Eggs (doz.) | 6.00 | 8.00 |
| Ghee( 1 tin) | 250.00 | 260.0 |
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : 105.94
Price in 2009 (₹) = Base price $(p_0)$
Price in 2010 (₹) = Current price $(p_1)$
Kindly draw full table.
| Price relative $\frac{p_1}{p_0}×100$ |
|
$\frac{21}{20}×100=105$ $\frac{14}{15}×100=93.33$ $\frac{3}{3}×100=100$ $\frac{2.80}{2.80}×100=100$ $\frac{8}{6}×100=133.33$ $\frac{260}{250}×100=104$ |
|
$∑\frac{p_1}{p_0}×100=635.66$ |
Hence, Required Price Index
$P_{01}=\frac{1}{N}\left(∑\frac{p_1}{p_0}×100\right)$
$=\frac{635.66}{6}=105.94$