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Statistical Methods in Economics
Notes Solution: Construction of a Simple Index Number-Simple Aggregate Method:
Commodities 1991 (or Base Year) 1995 (or Current Year)
P (Rs.) P (Rs.)
0 1
A 50 80
B 40 60
C 10 20
D 5 10
E 2 6
Total ∑P = 107 ∑P = 176
0 1
∑ P 176
=
P = 01 ∑ P 1 0 × 100 = 107 × 100 164.48
Thus, Price Index No. = 164.48
It means that prices, in general has inceased by 64.48%.
Example 2: Construct price index number for 1990 based on 1981 using Simple Agregative Method:
Commodities Price in 1981 (in Rs.) Price in 1990 (in Rs.)
A 50 80
B 40 60
C 10 20
D 5 10
E 2 8
Solution:
Construction of Price Index Number
Commodities Price in 1981 (P ) Price in 1990 (P )
0 1
A 50 80
B 40 60
C 10 20
D 5 10
E 2 8
Total ∑P = 107 ∑P = 178
0 1
∑ P 176
P = 1 × 100 = × 100 166.48
=
01 ∑ P 0 107
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