Construct price index number from the following data using Laspeyre’s Method.
|
Commodity |
Price |
Quantity |
||
|
Year 2008 |
Year 2010 |
Year 2008 |
Year 2010 |
|
|
P |
2 |
4 |
8 |
5 |
|
Q |
5 |
6 |
12 |
10 |
|
R |
4 |
5 |
15 |
12 |
|
S |
2 |
4 |
18 |
20 |
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 145.93
Given Data
|
Commodity |
Price 2008 $p_0$ |
Price 2010 $p_1$ |
Quantity 2008 $q_0$ |
Quantity 2010 $q_1$ |
|
P |
2 |
4 |
8 |
5 |
|
Q |
5 |
6 |
12 |
10 |
|
R |
4 |
5 |
15 |
12 |
|
S |
2 |
4 |
18 |
20 |
Prepare required calculations
|
Commodity |
$p_0q_0$ |
$p_1q_0$ |
$p_0q_1$ |
$p_1q_1$ |
|
P |
16 |
32 |
10 |
20 |
|
Q |
60 |
72 |
50 |
60 |
|
R |
60 |
75 |
48 |
60 |
|
S |
36 |
72 |
40 |
80 |
|
Σ |
172 |
251 |
148 |
220 |
Laspeyres’ Price Index
$P_L = \frac{\sum p_1 q_0}{\sum p_0 q_0} \times 100$
$P_L = \frac{251}{172} \times 100 = 145.93$