Page 259 - DMGT404 RESEARCH_METHODOLOGY

Unit 11: Index Numbers

7. Compute consumer price index number from the following data by aggregate expenditure. Notes
Quantities Units in
Prices in
Prices in
Commodity consumed in which prices base year current year
base year are quoted
Wheat 400 kgs /quintal 350 400
Rice 2 quin tals /quintal 580 700
Gram 100 kgs /quintal 740 950
Pulses 2 quin tals /quintal 980 1200
Ghee 50 kgs / kg . 70 85
Sugar 50 kgs / kg . 8 11
Fire wood 5 quintals /quin tal 50 60
House Rent 1 house /house 1600 1800
8. A textile worker in the city of Ahmedabad earns 750 per month. The cost of living index
for January 1986 is given as 160. Using the following data find out the amounts he spends
on (i) Food and (ii) Rent.
9. "In the construction of index numbers the advantages of geometric mean are greater than
those of arithmetic mean". Discuss.

10. Show that the Laspeyres's index has an upward bias and the Paasche's index has a downward
bias. Under what conditions the two index numbers will be equal?

Answers: Self Assessment

1. homogeneous 2. weighted

3. barometers 4. level of an activity
5. base year 6. Current year
7. weights 8. price
9. Quantity index number 10. price index numbers

11. cost of living 12. real wages
13. base 14. weighing
15. quality 16. different

11.12 Further Readings

Books Allan & Blumon, Elementary Statistics : A Step by Step Approach. McGraw-Hill
College, June 2003.
David & Moae, Introduction to the Practice of Statistics, W.H. Freeman & Co., February
2005.
James T. McClave Terry Sincich, William Mendenhall, Statistics, Prentice Hall,
February 2005.
Mario F. Triola, Elementary Statistics, Addison-Wesley, January 2006.
Mark L. Berenson, David M. Revine, Tineothy C. Krehbiel, Basic Business Statistics:
Concepts & Applications, Prentice Hall, May 2005.

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