Page 272 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Statistical Methods in Economics

Notes Clothing 230 8 1,840
Rent 160 12 1,920
Miscellaneous 190 15 2,850
∑ W = 93 ∑ IW = 25,706

∑ IW 25,706
Cost of Living Index = = = 276.41.
∑ W 93
Example 5: The percentage expenses on different commodities consumed by the middle class
families of a certain city and the group index numbers in 2005 as compared with the
base year 2004 are as follows:

Commodities % Expenses Index

Food 45 410
Rent 15 150
Clothing 12 343
Fuel and Lighting 8 248
Miscellaneous 20 285

Calculate the consumer index for the year 2005.
Solution:
Calculation of Consumer Price Index

Commodities % Expenses Index IW
W I
Food 45 410 18,450
Rent 15 150 2,250
Clothing 12 343 4,116
Fuel and Lighting 8 248 1,984
Miscellaneous 20 285 5,700
∑ W = 100 ∑ IW = 32,500

∑ IW 32,500
Consumer Price Index = = = 325.
∑ W 100
Example 6: Construct the cost of living index number from the following group data:

Group Weights Group Index No.

(1) Food 47 247
(2) Fuel and Lighting 7 293
(3) Clothing 8 289
(4) House Rent 13 100
(5) Miscellaneous 14 236

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