A business analyst has obtained the following information (Table 4) on the prices (in Rands) and quantities (in boxes) of three flavours of ice-cream sold by a small business owner during 2016 and 2021. Ice-cream flavours Price (Rands per box) 130 2016 140 145 Quantity (boxes) 44 000 21 500 15 900 Vanilla Chocolate Strawberry Table 4: Prices and quantities of three different flavours of ice-cream. Price (Rands per box) 170 200 220 2021 Quantity (boxes) 92 000 40 200 36 600

Mathematics For Machine Technology
8th Edition
ISBN:9781337798310
Author:Peterson, John.
Publisher:Peterson, John.
Chapter38: Achievement Review—section Three
Section: Chapter Questions
Problem 20AR
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Use the information provided below to answer questions 16 to 20.
A business analyst has obtained the following information (Table 4) on the prices (in Rands) and quantities (in boxes) of
three flavours of ice-cream sold by a small business owner during 2016 and 2021.
Ice-cream flavours
Question 16
Vanilla
Chocolate
Strawberry
Table 4: Prices and quantities of three different flavours of ice-cream.
A 135.60
B 66.73
C 138.44
D 149.86
Question 17
Using 2016 as the base year, calculate the Laspeyre's Price Index for 2021.
Price
(Rands per box)
130
140
145
A 287.54
B 48.15
C 72.15
D 207.70
2016
Question 18
Quantity
(boxes)
44 000
21 500
15 900
Using 2016 as the base year, calculate the Paasche's Quantity Index for 2021.
A 149.86
B 138.60
C 207.70
D 66.73
Using 2016 as the base year, calculate the Pasche's Price Index for 2021.
Price
(Rands per box)
170
200
220
2021
Quantity
(boxes)
92 000
40 200
36 600
Transcribed Image Text:Use the information provided below to answer questions 16 to 20. A business analyst has obtained the following information (Table 4) on the prices (in Rands) and quantities (in boxes) of three flavours of ice-cream sold by a small business owner during 2016 and 2021. Ice-cream flavours Question 16 Vanilla Chocolate Strawberry Table 4: Prices and quantities of three different flavours of ice-cream. A 135.60 B 66.73 C 138.44 D 149.86 Question 17 Using 2016 as the base year, calculate the Laspeyre's Price Index for 2021. Price (Rands per box) 130 140 145 A 287.54 B 48.15 C 72.15 D 207.70 2016 Question 18 Quantity (boxes) 44 000 21 500 15 900 Using 2016 as the base year, calculate the Paasche's Quantity Index for 2021. A 149.86 B 138.60 C 207.70 D 66.73 Using 2016 as the base year, calculate the Pasche's Price Index for 2021. Price (Rands per box) 170 200 220 2021 Quantity (boxes) 92 000 40 200 36 600
Question 19
Using 2016 as the base year, calculate the Laspeyre's Quantity Index for 2021.
A 138.60
B 207.47
C 72.15
D 149.86
Question 20
In general, consumers are price-takers; thus, they are expected to react to price changes by substituting ice-cream
flavours that have become relatively cheaper for those that have become relatively more expensive. This phenomenon is
consistent with the substitution effect. Substitution tends to cause a negative correlation between the price and quantity
relatives.
With regard to the observation above, and the indices calculated above, which of the following is false?
A The transaction data on the ice-cream sales is not indicative of substitution effect.
B The Paasche's indices are relatively greater than the Laspeyre's indices.
C The price and quantity relatives of the ice-cream data are positively correlated.
D The price and quantity relatives of the ice-cream data are negatively correlated.
Transcribed Image Text:Question 19 Using 2016 as the base year, calculate the Laspeyre's Quantity Index for 2021. A 138.60 B 207.47 C 72.15 D 149.86 Question 20 In general, consumers are price-takers; thus, they are expected to react to price changes by substituting ice-cream flavours that have become relatively cheaper for those that have become relatively more expensive. This phenomenon is consistent with the substitution effect. Substitution tends to cause a negative correlation between the price and quantity relatives. With regard to the observation above, and the indices calculated above, which of the following is false? A The transaction data on the ice-cream sales is not indicative of substitution effect. B The Paasche's indices are relatively greater than the Laspeyre's indices. C The price and quantity relatives of the ice-cream data are positively correlated. D The price and quantity relatives of the ice-cream data are negatively correlated.
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