Page 230 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Statistical Methods in Economics

Notes Calculation of Weighted Price Index

Price During
Material Unit Quantity 1990 1995

q P P p q p q
0 1 0 1
Cement 100 Qtl. 5 5.0 8.0 25 40
Timber c.ft. 2,000 9.5 14.2 19,000 28,400
Steel Sheet c.wt. 50 34.0 42.0 1,700 2,100
Bricks per’ 000 20 12.0 24.0 240 480
∑ p q = 20,965 ∑ p q = 31,020
1
0
∑ pq
1
P = × 100 ∑ p q = 31,020; ∑ p q = 20,965
;
01 ∑ pq 1 0
0
31,020
∴ P = 20,965 × 100 = 147.96
01
Example 7: Construct index numbers of price from the following data by applying:
1. Laspeyres method,
2. Paasche method,
3. Bowley’s method,
4. Fisher’s Ideal method, and
5. Marshall-Edgeworth method.
2006 2007
Commodity Price Quantity Price Quantity

A 2 8 4 6
B 5 10 6 5
C 4 14 5 10
D 2 19 2 13

Solution:
2006 2007

Commodity Price Qty. Price Qty. p q p q p q p q
1 0 0 0 1 1 0 1
p q p q
0 0 1 1
A 2 8 4 6 32 16 24 12
B 5 10 6 5 60 50 30 25
C 4 14 5 10 70 56 50 40
D 2 19 2 13 38 38 26 26
∑ p q ∑ p q ∑ p q ∑ p q
11
01
00
10
= 200 = 160 = 130 = 103

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