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Question
Define family budget method
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Solution
In this method, the weights are calculated by multiplying prices and quantity of the base year.
i.e. V = `sum"p"_0"q"_0`.
The formula is given by,
Cost of Living Index Number = `(sum"pv")/(sum"v")`
Where P = `"p"_1/"p"_0 xx 100` is the price relative.
V = `sum"p"_0"q"_0` is the value relative.
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RELATED QUESTIONS
Complete the Correlation:
__________ : Single variable :: Composite index : Group of variables
Index number was originally developed to measure ______.
Explain Paasche’s price index number
Discuss about Cost of Living Index Number
Calculate price index number for 2005 by (a) Laspeyre’s (b) Paasche’s method
| Commodity | 1995 | 2005 | ||
| Price | Quantity | Price | Quantity | |
| A | 5 | 60 | 15 | 70 |
| B | 4 | 20 | 8 | 35 |
| C | 3 | 15 | 6 | 20 |
The following are the group index numbers and the group weights of an average working class family’s budget. Construct the cost of living index number:
| Groups | Food | Fuel and Lighting |
Clothing | Rent | Miscellaneous |
| Index Number | 2450 | 1240 | 3250 | 3750 | 4190 |
| Weight | 48 | 20 | 12 | 15 | 10 |
Choose the correct alternative:
Which of the following Index number satisfy the time reversal test?
Assertion and reasoning question:
- Assertion (A): The index number considers all factors.
- Reasoning (R): The index number is based on samples.
Explain the meaning of index number.
State with reasons whether you agree or disagree with the following statement:
Index number measures changes in the price level only.
