Advertisement
Advertisement
Advertisement
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 |
Advertisement
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
Is there an error in this question or solution?
