Question

A famíly budget enquiry revealed the information that weights used.
were : food 30, Clothing 5. Rent 8, fuel 5. Miscellaneous 2. Calculate
the cost of living index number if average Increase fo the poice of
gooups over base peolad were 35,60, 50, 80,60 respectively.
It a person form such a group was coming I 12.000 in base
year what should be bis eamings in current period in order to
maintain some standard of Bring at that of in base year?​

Answer 1

Given : a family budget enquiry revealed the information that/ weights used were : Food 30, Clothing 5, Rent 8 ,Fuel 5, Miscellaneous 2

average increase in the price of groups over base period were 35,60,50,80,60 respectively.

To Find :  a person from such group was earning Rs. 12000in base year , what should be his earnings in current period in order to maintain same standard of living at that of in base year

Solution:

Food 30, Clothing 5, Rent 8 ,Fuel 5, Miscellaneous 2.

Total = 50

Earning = 12000

Expenses on Food = (30/50) * 12000  = 7200

Expenses on Clothing = (5/50) * 12000  = 1200

Expenses on Rent = (8/50) * 12000  = 1920

Expenses on Fuel = (5/50) * 12000  = 1200

Expenses on Miscellaneous = (2/50) * 12000  = 480

New expense of Food  = 7200 + (35/100)7200 =  9720

New expense of Clothing  = 1200 + (60/100)7200 =  1920

New expense of Rent  = 1920 + (50/100)7200 =  2880

New expense of Fuel   = 1200 + (80/100)7200 =  2160

New expense of Miscellaneous  = 480 + (60/100)7200 =  768

New expenses = 17748

17748 should be his earnings in current period in order to maintain same standard of living at that of in base year

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