The Cost of Living Index Numbers for years 2003 and 2008 are 150 and 200 respectively. A person earned ₹ 18,000 per month in year 2003. What should be his earning per month in year 2008, so as to - Mathematics and Statistics

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Sum

The Cost of Living Index Numbers for years 2003 and 2008 are 150 and 200 respectively. A person earned ₹ 18,000 per month in year 2003. What should be his earning per month in year 2008, so as to maintain same standard of living as 2003?

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Solution

For the year 2003,

CLI = 150 and income = ₹ 18,000

Now, Real income = `"Income"/"CLI" xx 100`

= `18000/150 xx 100`

= 120 × 100

= ₹ 12,000

For the year 2008,

CLI = 200

If standard of living is to be maintained, real income in the year 2008 should also be ₹ 12,000

Real income = `"Income"/"CLI" xx 100`

∴ 12000 = `"Income"/"CLI" xx 100`

∴ Income = 12,000 × 2

= ₹ 24,000

∴ In order to maintain same order of living as in the year 2003, income in 2008 should be ₹ 24,000.

Concept: Uses of Cost of Living Index Number
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Chapter 2.5: Index Numbers - Q.4
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