Question

Complete the following activity to calculate, Laspeyre's and Paasche's Price Index Number for the following data :

Commodity	Base Year		Current Year
	Price p0	Quantity q0	Price p1	Quantity q1
I	8	30	12	25
II	10	42	20	16

Solution:

Commodity	Base Year		Current Year		p1q0	p0q0	p1q1	p0q1
	p0	q0	p1	q1
I	8	30	12	25	360	240	300	200
II	10	42	20	16	840	420	320	160
Total					`bb(sump_1q_0=1200)`	`bb(sump_0q_0=660)`	`bb(sump_1q_1=620)`	`bb(sump_0q_1=360)`

Laspeyre's Price Index Number:

P₀₁(L) = `(sum"p"_1"q"_0)/(sum"p"_0"q"_0) xx 100 = square/660xx100`

∴ P₀₁(L) = `square`

Paasche 's Price Index Number:

P₀₁(P) = `(sum"p"_1"q"_1)/(sum"p"_0"q"_1) xx 100=(620)/(square) xx 100`

∴ P₀₁(P) = `square`

Answer 1

Commodity	Base Year		Current Year		p1q0	p0q0	p1q1	p0q1
	p0	q0	p1	q1
I	8	30	12	25	360	240	300	200
II	10	42	20	16	840	420	320	160
Total					`bb(sump_1q_0=1200)`	`bb(sump_0q_0=660)`	`bb(sump_1q_1=620)`	`bb(sump_0q_1=360)`

Laspeyre's Price Index Number:

P₀₁(L) = `(sum"p"_1"q"_0)/(sum"p"_0"q"_0) xx 100 = bb(1200)/660xx100`

∴ P₀₁(L) = 181.82

Paasche 's Price Index Number:

P₀₁(P) = `(sum"p"_1"q"_1)/(sum"p"_0"q"_1) xx 100=(620)/bb(360) xx 100`

∴ P₀₁(P) = 172.2