Question

The monthly per capita expenditure incurred by workers for an industrial centre during 1980 and 2005 on the following items are given below. The weights of these items are 75,10, 5, 6, and 4 respectively. Prepare a weighted index number for the cost of living for 2005 with 1980 as the base. 

Items	Price in 1980	Price in 2005
Food	100	200
Clothing	20	25
Fuel and Lighting	15	20
House rent	30	40
Misc.	35	65

Answer 1

Items	Price in 1980 P0	Price in 2005 P1	Weight W	R = `P_1/P_0 xx 100`	RW
Food	100	200	75	`200/100 xx 100 = 200`	15,000
Clothing	20	25	10	`25/20 xx 100 = 125`	1,250
Fuel and Lighting	15	20	5	`20/15 xx 100 = 133.33`	666.65
House Rent	30	40	6	`40/30 xx 100 = 133.33`	799.98
Misc.	35	65	4	`65/35 xx 100 = 185.71`	742.84
			∑W = 100		∑RW = 18,459.47

Cost of Living (CPI) = `(sumWR)/(sumW)`

= `18459.47/100`

= 184.59