Concept explainers
a.
Develop a simple price index using 2000 as the base period.
a.
Answer to Problem 6E
The simple price index using 2000 as the base period is given below:
Fruit | Price ($) (2000) | Price ($) (2014) | Simple Price Index |
Bananas (pound) | 0.23 | 0.69 | 300 |
Grapefruit (each) | 0.29 | 1 | 344.83 |
Apples (pound) | 0.35 | 1.89 | 540 |
Strawberries (basket) | 1.02 | 3.79 | 371.57 |
Oranges (bag) | 0.89 | 2.99 | 335.96 |
Explanation of Solution
Calculation:
The simple price index using 2000 as the base period is obtained as follows:
Fruit | Price ($) (2000) | Price ($) (2014) | |
Bananas (pound) | 0.23 | 0.69 | |
Grapefruit (each) | 0.29 | 1 | |
Apples (pound) | 0.35 | 1.89 | |
Strawberries (basket) | 1.02 | 3.79 | |
Oranges (bag) | 0.89 | 2.99 |
b.
Develop a simple aggregate price index using 2000 as the base period.
b.
Answer to Problem 6E
The simple aggregate price index using 2000 as the base period is 372.66.
Explanation of Solution
Calculation:
The simple aggregate price index using 2000 as the base period is obtained as follows:
Thus, the simple aggregate price index using 2000 as the base period is 372.66.
c.
Find the Laspeyres’ price index using 2000 as the base period.
c.
Answer to Problem 6E
The Laspeyres’ price index using 2000 as the base period is 406.08.
Explanation of Solution
Calculation:
The Laspeyres’ price index using 2000 as the base period is obtained as follows:
Thus, the Laspeyres’ price index using 2000 as the base period is 406.08.
d.
Find the Paasche’s index using 2000 as the base period.
d.
Answer to Problem 6E
The Paasche’s index using 2000 as the base period is 397.56.
Explanation of Solution
Calculation:
The Paasche’s index using 2000 as the base period is obtained as follows:
Thus, the Paasche’s index using 2000 as the base period is 397.56.
e.
Find the Fisher’s ideal index.
e.
Answer to Problem 6E
The Fisher’s ideal index is 401.80.
Explanation of Solution
Calculation:
The Fisher’s ideal index is obtained as follows:
Thus, the Fisher’s ideal index is 401.80.
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Chapter 17 Solutions
Loose Leaf for Statistical Techniques in Business and Economics (Mcgraw-hill/Irwin Series in Operations and Decision Sciences)
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