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Base year weights (W) and current year price relatives (I) are given in Problem. Calculate the cost of living index in: - Mathematics and Statistics

Sum

Base year weights (W) and current year price relatives (I) are given in Problem. Calculate the cost of living index in:

Group Food Clothing Fuel & Lighting House Rent Miscellaneous
I 200 150 120 180 160
W 30 20 10 40 50
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Solution

Group I W IW
Food 200 30 6000
Clothing 150 20 3000
Fuel and Lighting 120 10 1200
House Rent 180 40 7200
Miscellaneous 160 50 8000
Total 150 25400

From the table,
`sum"W" = 150, sum"W" = 25400`
Now, by Family Budget Method,

CLI = `(sum"IW")/(sum"W") = (25400)/(150)` = 169.33

Concept: Method of Constructing Cost of Living Index Numbers - Family Budget Method
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