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Sagot :
Answer:
a. We have:
Toothpaste simple price index = 134.54
Shampoo simple price index = 136.47
Cough drops = 263.52
Antiperspirant = 139.11
b. Simple aggregate price index = 158.52
c. Laspeyres’ price Index = 147.09
d. Paasche price index = 150.23
Explanation:
a. Determine the simple price indexes.
Simple price index = (Price of a good in the current / Price of the good in the base year) * 100 ……. (1)
Using equation (1), we have:
Item August 2000 August 2017
Price Quantity Price Quantity
Toothpaste simple price index = ($3.35 / $2.49) * 100 = 134.54
Shampoo simple price index = ($4.49 / 3.29) * 100 = 136.47
Cough drops = ($4.19 / 1.59) * 100 = 263.52
Antiperspirant = ($2.49 / $1.79) * 100 = 139.11
b. Determine the simple aggregate price index for the two years.
Simple aggregate price index = (Total of the current year’s prices of the four commodities / Total of the base year’s prices of the four commodities) * 100 = (($3.35 + $4.49 + $4.19 + $2.49) / ($2.49 + $3.29 + $1.59 + $1.79)) * 100 = 158.52
c. Determine Laspeyres' price index.
Laspeyres’ price Index = Cost of the base quantities of the four commodities at current prices / (Cost of the base quantities of the four commodities at base period prices) * 100 = ((($3.35 * 6) + ($4.49 * 4) + ($4.19 * 2) + ($2.49 * 3)) / (($2.49 * 6) + ($3.29 * 4) + ($1.59 * 2) + (1.79 * 3))) * 100 = 147.09
d. Determine the Paasche price index.
Paasche price index = Cost of the current quantities of the four commodities at current prices / (Cost of the current quantities of the four commodities at base period prices) * 100 = ((($3.35 * 6) + ($4.49 * 5) + ($4.19 * 3) + ($2.49 * 4)) / (($2.49 * 6) + ($3.29 * 5) + ($1.59 * 3) + ($1.79 * 4))) * 100 = 150.23
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