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To construct the Index numbers of price, we first need to calculate the required sums from the given data. Let 1984 be the base year (denoted by subscript 0) and 1985 be the current year (denoted by s
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To construct the Index numbers of price, we first need to calculate the required sums from the given data. Let 1984 be the base year (denoted by subscript 0) and 1985 be the current year (denoted by subscript 1).
The data is:
| Commodities | ||||
|---|---|---|---|---|
| A | 4 | 8 | 8 | 6 |
| B | 10 | 10 | 12 | 5 |
| C | 8 | 14 | 10 | 10 |
| D | 4 | 19 | 4 | 13 |
Step 1: Calculate the necessary products and their sums.
| Commodity | ||||||||
|---|---|---|---|---|---|---|---|---|
| A | 4 | 8 | 8 | 6 | ||||
| B | 10 | 10 | 12 | 5 | ||||
| C | 8 | 14 | 10 | 10 | ||||
| D | 4 | 19 | 4 | 13 | ||||
| Sum | 400 | 320 | 260 | 206 |
So, we have:
(i) Laspeyre's method
The formula for Laspeyre's Price Index () is:
Substitute the sums:
(ii) Paasche's method
The formula for Paasche's Price Index () is:
Substitute the sums:
*(iii) Bowley's
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