Question

If ∑p₀q₀ = 140, ∑p₀q₁ = 200, ∑p₁q₀ = 350, ∑p₁q₁ = 460, find Laspeyre’s, Paasche’s, Dorbish-Bowley’s and Marshall-Edgeworth’s Price Index Numbers.

If ∑p₀q₀ = 140, ∑p₀q₁ = 200, ∑ p₁q₀ = 350, ∑ p₁q₁ = 460, find Laspeyre’s, Paasche’s, Dorbish-Bowley’s Price Index Numbers.

Answer 1

Given: ∑p₀q₀ = 140, ∑p₀q₁ = 200, ∑p₁q₀ = 350, ∑p₁q₁ = 460

Laspeyre’s Price Index Number:

`P_01(L) = (sum p_1 q_0)/(sum p_0 q_0) xx 100`

= `350/140 xx 100` 

= 250

Paasche’s Price Index Number:

`P_01(P) = (sum p_1 q_1)/(sum p_0 q_1) xx 100`

= `460/200 xx 100`

= 230

Dorbish-Bowley’s Price Index Number:

`P_01(D - B) = (P_01(L) + P_01(P))/2`

= `(250 + 230)/2`

= `480/2`

= 240

Marshall-Edgeworth’s Price Index Number:

`P_01(M - E) = (sum p_1 q_0 + sum p_1 q_1)/(sum p _0 q_0 + sum p_0 q_1) xx 100`

= `(350 + 460)/(140 + 200) xx 100`

= `810/340 xx 100`

= 238.24