Question

(c) Construct the price index for 2008 on basis of the year 2005.
Goods A B C D E
Price of 2005 80 60 50 40 10
Price of 2008 100 8 70 50 10​

Answer 1

${\boxed{\mathtt{\purple{Answer}}}}$

$\red{P_{01} \: = \: 124.668}$

${\boxed{\mathtt{\purple{Solution}}}}$

$P_{01} \: = \: \frac{ \sum \frac{P_1}{P_0} \times 100 }{n}$

$\implies \: \frac{623.34}{5}$

$\implies \: 124.668$

__________________________

Methods of Constructing Index Numbers :-

1. Construction of Simple index number

• Simple Aggregative method
• Simple average of price relatives method

1. Construction of Weighted index number

• Weighted Average of Price relative method
• Weighted aggregate method .

We have solved the sum by Simple average of price relative method .

According tothis method we first find out price relatives for each commodity and then take simple average of all the price relatives.