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Question
Solve the following problem :
Calculate Marshall-Edgeworth’s Price Index Number for the following data.
| Commodity | Base Year | Current Year | ||
| Price p0 |
Quantity q0 |
Price p1 |
Quantity q1 |
|
| X | 12 | 35 | 15 | 25 |
| Y | 29 | 50 | 30 | 70 |
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Solution
| Commodity | Base Year | Current Year | q0 + q1 | p0 (q0 + q1) |
p1 {q0 + q1) |
||
| p0 | q0 | p1 | q1 | ||||
| X | 12 | 35 | 15 | 25 | 60 | 720 | 900 |
| Y | 29 | 50 | 30 | 70 | 120 | 3480 | 3600 |
| Total | – | – | – | – | – | 4200 | 4500 |
From the table,
`sum"p"_0("q"_0 + "q"_1) = 4,200, sum"p"_1("q"_0 + "q"_1) = 4500`
Marshall-Edgeworth’s Price Index Number:
P01(M–E) = `(sum"p"_1("q"_0 + "q"_1))/(sum"p"_0("q"_0 + "q"_1)) xx 100`
= `(4500)/(4200) xx 100`
= 107.14
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| Price p0 |
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