Question

Solve the following problem :

Given that Laspeyre’s and Paasche’s Price Index Numbers are 25 and 16 respectively, find Dorbish-Bowley’s and Fisher’s Price Index Number.

Answer 1

Given, P₀₁(L) = 25, P₀₁(P) = 16
Dorbish-Bowley’s Price Index Number:

P₀₁(D–B) = `("P"_01("L") + "P"_01("P"))/(2)`

= (25 + 16)/(2)`

= `(41)/(2)`
= 20.5

Fisher’s Price Index Number:

P₀₁(F) = `sqrt("P"_01("L") xx "P"_01("P"))`

= `sqrt(25 xx 16)`

= `sqrt(400)`
= 20