Page 258 - DMGT404 RESEARCH_METHODOLOGY

Research Methodology

Notes Quantity Index Number: Index number that measures the change in quantities in current year as
compared with a base year.

11.11 Review Questions

1. Construct Laspeyres's, Paasche's and Fisher's indices from the following data :

1986 1987
Item Price (Rs) Expenditure (Rs) Price (Rs) Expenditure (Rs)
1 10 60 15 75
2 12 120 15 150
3 18 90 27 81
4 8 40 12 48
2. From the following data, prove that Fisher's Ideal Index satisfies both the time reversal
and the factor reversal tests.
Base Year Current Year
Commodity Price Quantity Price Quantity
A 6 50 10 60
B 2 100 2 120
C 4 60 6 60

3. Examine various steps and problems involved in the construction of an index number.
4. Distinguish between average type and aggregative type of index numbers. Discuss the
nature of weights used in each case.
5. Given the following data:

Year Average weekly take-home wages Consumer price index
( ) ( )
1968 109.50 112.8
1969 112.20 118.2
1970 116.40 127.4
1971 125.08 138.2
1972 135.40 143.5
1973 138.10 149.8

(a) What was the real weekly wage for each year?
(b) In which year did the employees had the greatest buying power?

(c) What percentage increase in the average weekly wages for the year 1973 is required
to provide the same buying power that the employees enjoyed in the year in which
they had the highest real wages?
6. Construct Consumer Price Index for the year 1981 with 1971 as the base year.
Items : Food Rent Clothes Fuel Others
Percentage Expenses : 35% 15% 20% 10% 20%
Value Index (1971 ) : 150 50 100 20 60
Value Index (1981 ) : 174 60 125 25 90

252 LOVELY PROFESSIONAL UNIVERSITY