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Using the data below, calculate the index numbers for question 13 using Laspeyre's and Paasche's methods.

Economics

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3 parts
a
139.71
b
139.88
c
139.79

Here's the solution for question 13.

To construct the index numbers, we first need to calculate the necessary sums.
Let P0P_0 and Q0Q_0 be the price and quantity in the base year (2010), and P1P_1 and Q1Q_1 be the price and quantity in the current year (2012).

Step 1: Create a table to calculate the required products.

ItemsP0Q0P1Q1P0Q0P1Q0P0Q1P1Q1A6501056300500336560B21002120200200240240C460660240360240360D10301224300360240288E8401236320480288432Total1360190013441880\begin{array}{|c|c|c|c|c|c|c|c|c|} \hline \textbf{Items} & \textbf{P}_0 & \textbf{Q}_0 & \textbf{P}_1 & \textbf{Q}_1 & \textbf{P}_0 \textbf{Q}_0 & \textbf{P}_1 \textbf{Q}_0 & \textbf{P}_0 \textbf{Q}_1 & \textbf{P}_1 \textbf{Q}_1 \\ \hline \text{A} & 6 & 50 & 10 & 56 & 300 & 500 & 336 & 560 \\ \text{B} & 2 & 100 & 2 & 120 & 200 & 200 & 240 & 240 \\ \text{C} & 4 & 60 & 6 & 60 & 240 & 360 & 240 & 360 \\ \text{D} & 10 & 30 & 12 & 24 & 300 & 360 & 240 & 288 \\ \text{E} & 8 & 40 & 12 & 36 & 320 & 480 & 288 & 432 \\ \hline \textbf{Total} & & & & & \textbf{1360} & \textbf{1900} & \textbf{1344} & \textbf{1880} \\ \hline \end{array}

From the table, we have:
∑P0Q0=1360\sum P_0 Q_0 = 1360
∑P1Q0=1900\sum P_1 Q_0 = 1900
∑P0Q1=1344\sum P_0 Q_1 = 1344
∑P1Q1=1880\sum P_1 Q_1 = 1880

a) Laspeyre's Method:
The formula for Laspeyre's Price Index (P01LP_{01}^L) is:

P01L=∑P1Q0∑P0Q0×100P_{01}^L = \frac{\sum P_1 Q_0}{\sum P_0 Q_0} \times 100

Substitute the values:

P01L=19001360×100P_{01}^L = \frac{1900}{1360} \times 100 P01L=1.3970588×100P_{01}^L = 1.3970588 \times 100 P01L=139.71P_{01}^L = \boxed{139.71}

b) Paasche's Method:
The formula for Paasche's Price Index (P01PP_{01}^P) is:

P01P=∑P1Q1∑P0Q1×100P_{01}^P = \frac{\sum P_1 Q_1}{\sum P_0 Q_1} \times 100

Substitute the values:

P01P=18801344×100P_{01}^P = \frac{1880}{1344} \times 100 P01P=1.3988095×100P_{01}^P = 1.3988095 \times 100 P01P=139.88P_{01}^P = \boxed{139.88}

c) Fisher's Method:
The formula for Fisher's Ideal Price Index (P01FP_{01}^F) is the geometric mean of Laspeyre's and Paasche's indices:

P01F=P01L×P01PP_{01}^F = \sqrt{P_{01}^L \times P_{01}^P}

Alternatively:

P01F=∑P1Q0∑P0Q0×∑P1Q1∑P0Q1×100P_{01}^F = \sqrt{\frac{\sum P_1 Q_0}{\sum P_0 Q_0} \times \frac{\sum P_1 Q_1}{\sum P_0 Q_1}} \times 100

Using the calculated Laspeyre's and Paasche's indices:

P01F=139.70588×139.88095P_{01}^F = \sqrt{139.70588 \times 139.88095} P01F=19542.06P_{01}^F = \sqrt{19542.06} P01F=139.79P_{01}^F = \boxed{139.79}
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