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Using the data below, calculate the index numbers for question 13 using Laspeyre's and Paasche's methods.
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3 partsHere's the solution for question 13.
To construct the index numbers, we first need to calculate the necessary sums.
Let and be the price and quantity in the base year (2010), and and be the price and quantity in the current year (2012).
Step 1: Create a table to calculate the required products.
From the table, we have:
a) Laspeyre's Method:
The formula for Laspeyre's Price Index () is:
Substitute the values:
b) Paasche's Method:
The formula for Paasche's Price Index () is:
Substitute the values:
c) Fisher's Method:
The formula for Fisher's Ideal Price Index () is the geometric mean of Laspeyre's and Paasche's indices:
Alternatively:
Using the calculated Laspeyre's and Paasche's indices:
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