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Question
Calculate Marshall-Edgeworth Price Index Number for following.
| Commodity | Base Year | Current Year | ||
| Price | Quantity | Price | Quantity | |
| A | 8 | 20 | 11 | 15 |
| B | 7 | 10 | 12 | 10 |
| C | 3 | 30 | 5 | 25 |
| D | 2 | 50 | 4 | 35 |
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Solution
Construct the following table:
| Commodity | Base Year | Current Year | p0q0 | p1q0 | p0q1 | p1q0 | ||
| p0 | q0 | p1 | q0 | |||||
| A | 8 | 20 | 11 | 5 | 160 | 220 | 40 | 55 |
| B | 7 | 10 | 12 | 10 | 70 | 120 | 70 | 120 |
| C | 3 | 30 | 5 | 20 | 90 | 150 | 60 | 100 |
| D | 2 | 50 | 4 | 15 | 100 | 200 | 30 | 60 |
| Total | – | – | – | – | 420 | 690 | 200 | 335 |
From the table, `sum"p"_0"q"_0` = 420, `sum"p"_1"q"_0` = 690, `sum"p"_0"q"_1` = 200, `sum"p"_1"q"_1` = 335
Marshall-Edgeworth’s Price Index Number:
P01(M-E) = `(sum"p"_1"q"_0 + sum"p"_1"q"_1)/(sum"p"_0"q"_0 + sum"p"_0"q"_1)`
= `(690 + 335)/(420 + 200) xx 100`
= `1025/6200 xx 100`
= 165.32
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∴ x = `square`
