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Question
Construct the cost of living Index number for 2015 on the basis of 2012 from the following data using family budget method.
| Commodity | Price | Weights | |
| 2012 | 2015 | ||
| Rice | 250 | 280 | 10 |
| Wheat | 70 | 85 | 5 |
| Corn | 150 | 170 | 6 |
| Oil | 25 | 35 | 4 |
| Dhal | 85 | 90 | 3 |
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Solution
| Commodity | Price | Weights (V) |
P = `"p"_1/"p"_0 xx 100` | PV | |
| 2012 (p0) |
2015 (p1) |
||||
| Rice | 250 | 280 | 10 | 112 | 1120 |
| Wheat | 70 | 85 | 5 | 121.43 | 607.15 |
| Corn | 150 | 170 | 6 | 113.33 | 679.98 |
| Oil | 25 | 35 | 4 | 140 | 560 |
| Dhal | 85 | 90 | 3 | 105.88 | 317.64 |
| Total | `sum"V"` = 28 | `sum"PV"` = 3284.77 | |||
Cost of living index number = `(sum"PV")/(sum"V")`
= `3284.77/28`
= 117.31
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__________ : Single variable :: Composite index : Group of variables
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State the uses of cost of Living Index Number
Calculate the cost of living index by aggregate expenditure method:
| Commodity | Weight 2010 |
Price (Rs.) | |
| 2010 | 2015 | ||
| P | 80 | 22 | 25 |
| Q | 30 | 30 | 45 |
| R | 25 | 42 | 50 |
| S | 40 | 25 | 35 |
| T | 50 | 36 | 52 |
Choose the correct alternative:
Cost of living at two different cities can be compared with the help of
Compute the consumer price index for 2015 on the basis of 2014 from the following data.
| Commodities | Quantities | Prices in 2015 | Prices in 2016 |
| A | 6 | 5.75 | 6.00 |
| B | 6 | 5.00 | 8.00 |
| C | 1 | 6.00 | 9.00 |
| D | 6 | 8.00 | 10.00 |
| E | 4 | 2.00 | 1.50 |
| F | 1 | 20.00 | 15.00 |
Read the given passage and answer the questions:
|
Index Number is a technique of measuring changes in a variable or group of related variables with reference to time, geographical location and other characteristics. Index Number is very useful for economists, farmers, traders, government, educationalists and trade union leaders for planning and implementing the plans according to their sector. The scope of index number is not limited to only one subject but it extends to many subjects such as Economics, Educational science, Psychology, History, Sociology, Geography etc. While framing index number its objective must be determined. To attain the objective the information is collected in various ways and this information is used for comparing two different time periods. For this purpose, the base year’s index is assumed as 100 and accordingly the value of the current year is calculated. Laspeyre, Paasche and Fisher have suggested different methods for constructing index numbers. |
- Explain the meaning of Index Number.
- To whom the Index Number is useful?
- Express your opinion about the given passage.
Choose the correct pair.
| Group A | Group B |
| 1) Price Index | a) `(sump_1q_1)/(sump_0q_0)xx100` |
| 2) Value Index | b) `(sumq_1)/(sumq_0)xx100` |
| 3) Quantity Index | c) `(sump_1q_1)/(sump_0q_1)xx100` |
| 4) Paasche's Index | d) `(sump_1)/(sump_0)xx100` |
Find the odd word out:
Features of Index Number:
