The questions has two parts: A departmental store sells stereo systems, television sets and radios. The percentage distribution of the total sales volume (in rupees) is estimated as 30 per cent stereos, 50 per cent televisions and 20 per cent radios. The prices of one stereo, one television and one radio in 1990 were $ 20,000, $15,000 and $ 500 respectively while their respective prices in 1995 were $25,000, $ 20,000 and $ 800. A weighted price index for 1995 with base 1990 is to be computed. (i) Which index number formula is appropriate, why? (ii) Compute the index.
The questions has two parts: A departmental store sells stereo systems, television sets and radios. The percentage distribution of the total sales volume (in rupees) is estimated as 30 per cent stereos, 50 per cent televisions and 20 per cent radios. The prices of one stereo, one television and one radio in 1990 were $ 20,000, $15,000 and $ 500 respectively while their respective prices in 1995 were $25,000, $ 20,000 and $ 800. A weighted price index for 1995 with base 1990 is to be computed. (i) Which index number formula is appropriate, why? (ii) Compute the index.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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