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Question
Calculate Fisher’s index number to the following data. Also show that it satisfies Time Reversal Test.
| Commodity | 2016 | 2017 | ||
| Price (Rs.) | Quantity (kg) | Price (Rs.) | Quantity (kg) | |
| Food | 40 | 12 | 65 | 14 |
| Fuel | 72 | 14 | 78 | 20 |
| Clothing | 36 | 10 | 36 | 15 |
| Wheat | 20 | 6 | 42 | 4 |
| Others | 46 | 8 | 52 | 6 |
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Solution
| Commodity | 2016 (Base year) |
2017 (Current year) |
p0q0 | p0q1 | p1q0 | p1q1 | ||
| p0 | q0 | p1 | q1 | |||||
| Food | 40 | 12 | 65 | 14 | 480 | 560 | 780 | 910 |
| Fuel | 72 | 14 | 78 | 20 | 1008 | 1440 | 1092 | 1560 |
| Clothing | 36 | 10 | 36 | 15 | 360 | 540 | 60 | 540 |
| Wheat | 20 | 6 | 42 | 4 | 120 | 80 | 252 | 168 |
| Others | 46 | 8 | 52 | 6 | 68 | 276 | 416 | 312 |
| Total | `sum"p"_0"q"_0` = 2336 | `sum"p"_0"q"_1` =2896 | `sum"p"_1"q"_0` = 2900 | `sum"p"_1"q"_1` = 3490 | ||||
Fisher’s Price Index Number
`"P"_01^"F" = sqrt((sum"p"_1"q"_0 xx sum"p"_1"q"_1)/(sum"p"_0"q"_0 xx sum"p"_0"q"_1)) xx 100`
= `sqrt((2900 xx 3490)/(2336 xx 2896)) xx 100`
= `sqrt((10121000)/(6765056)) xx 100`
= `sqrt(1.4961) xx 100`
= `1.2232 xx 100`
= 122.32
Time Reserved Test: P01 × P10 = 1
= `sqrt((sum"p"_1"q"_0 xx sum"p"_1"q"_1 xx sum"q"_1"p"_0 xx sum"q"_0"p"_0)/(sum"p"_0"q"_0 xx sum"p"_0"q"_1 xx sum"p"_1"q"_1 xx sum"p"_0"p"_1))`
= `sqrt((2900 xx 3490 xx 2896 xx 2336)/(2336 xx 2896 xx 3490 xx 2900)`
= 1
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