In an effort to analyze the effect of COVID 19 on health careexpenditure a research team in Healthystate considered 2019 to be the base year in calculating the Laspeyres Index. The following are data from 2018, 2019 and 2020 Quantity 2018Prices 2018Quantity 2019Prices 2019Quantity 2020Prices 2020Oxygen Supply1501001701102500180Pharmaceutical Products5002707502501500210Intensive Care5021705022005002300Elective surgeries1501870130210053500Considering the base year as year "0"a- calculate the Laspeyres index between 2018 and 2019b- Calculate the Laspeyres index between 2019 and 2020c- John claimed that since 2020 is an important year (since most of it was COVID 19 issues) we need to consider it as the base year. Calculate the Laspeyres index between 2019 and 2020. d- Why would there be a difference between the index in part c and the one in part b?

Hi Student, thanks for posting the question. As per the guideline we are providing answers for the first three sub part question. Kindly post the remaining questions separately. Also, if you need answer for any specific question, then mention it.Laspeyres index (LI) can be calculated by using the following formula.a. Substitute the respective values in Equation (1) to calculate the LI for year between 2018 and 2019. Base year is 2019. The value of LI is 0.9718.b. Substitute the respective values in Equation (1) to calculate the LI for year between 2020 and 2019. Base year is 2019. The value of LI is 1.287.b. Substitute the respective values in Equation (1) to calculate the LI for year between 2020 and 2019. Base year is 2020. The value of LI is 0.911.

Answered: In an effort to analyze the effect of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In an effort to analyze the effect of COVID 19 on health careexpenditure a research team in Healthystate considered 2019 to be the base year in calculating the Laspeyres Index. The following are data from 2018, 2019 and 2020

	Quantity 2018	Prices 2018	Quantity 2019	Prices 2019	Quantity 2020	Prices 2020
Oxygen Supply	150	100	170	110	2500	180
Pharmaceutical Products	500	270	750	250	1500	210
Intensive Care	50	2170	50	2200	500	2300
Elective surgeries	150	1870	130	2100	5	3500

Considering the base year as year "0"

a- calculate the Laspeyres index between 2018 and 2019

b- Calculate the Laspeyres index between 2019 and 2020

c- John claimed that since 2020 is an important year (since most of it was COVID 19 issues) we need to consider it as the base year. Calculate the Laspeyres index between 2019 and 2020.

d- Why would there be a difference between the index in part c and the one in part b?

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