Concept explainers
a.
Develop a simple price index using 2000 as the base period.
a.
Answer to Problem 7E
The simple price index using 2000 as the base period is given below:
Item | Price ($) (2000) | Price ($) (2017) | Simple Price Index |
Washer | 0.07 | 0.10 | 142.9 |
Cotter pin | 0.04 | 0.03 | 75 |
Stove bolt | 0.15 | 0.15 | 100 |
Hex nut | 0.08 | 0.10 | 125 |
Explanation of Solution
Calculation:
The simple price index using 2000 as the base period is obtained as follows:
Item | Price ($) (2000) | Price ($) (2017) | |
Washer | 0.07 | 0.10 | |
Cotter pin | 0.04 | 0.03 | |
Stove bolt | 0.15 | 0.15 | |
Hex nut | 0.08 | 0.10 |
b.
Develop a simple aggregate price index using 2000 as the base period.
b.
Answer to Problem 7E
The simple aggregate price index using 2000 as the base period is 111.76.
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 111.76.
c.
Find Laspeyres’ price index using 2000 as the base period.
c.
Answer to Problem 7E
Laspeyres’ price index using 2000 as the base period is 102.92.
Explanation of Solution
Calculation:
Laspeyres’ price index using 2000 as the base period is obtained as follows:
Thus, Laspeyres’ price index using 2000 as the base period is 102.92.
d.
Find Paasche’s index using 2000 as the base period.
d.
Answer to Problem 7E
Paasche’s index using 2000 as the base period is 103.32.
Explanation of Solution
Calculation:
Paasche’s index using 2000 as the base period is obtained as follows:
Thus, Paasche’s index using 2000 as the base period is 103.32.
e.
Find Fisher’s ideal index.
e.
Answer to Problem 7E
Fisher’s ideal index is 103.12.
Explanation of Solution
Calculation:
Fisher’s ideal index is obtained as follows:
Thus, Fisher’s ideal index is 103.12.
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Chapter 17 Solutions
EBK STATISTICAL TECHNIQUES IN BUSINESS
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