Concept explainers
a.
Develop a simple price index using 2000 as the base period.
a.
Answer to Problem 8E
The simple price index using 2000 as the base period is given below:
Item | Price ($) (2000) | Price ($) (2017) | Simple Price Index |
Syringes (dozen) | 6.10 | 6.83 | 111.97 |
Thermometers | 8.10 | 9.35 | 115.43 |
Advil (bottle) | 4 | 4.62 | 115.5 |
Patient record forms (box) | 6 | 6.85 | 114.17 |
Copier paper (box) | 12 | 13.65 | 113.75 |
Explanation of Solution
Calculation:
The simple price index using 2000 as the base period is obtained as follows:
Item | Price ($) (2000) | Price ($) (2017) | |
Syringes (dozen) | 6.10 | 6.83 | |
Thermometers | 8.10 | 9.35 | |
Advil (bottle) | 4 | 4.62 | |
Patient record forms (box) | 6 | 6.85 | |
Copier paper (box) | 12 | 13.65 |
b.
Develop a simple aggregate price index using 2000 as the base period.
b.
Answer to Problem 8E
The simple aggregate price index using 2000 as the base period is 114.09.
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 114.09.
c.
Find Laspeyres’ price index using 2000 as the base period.
c.
Answer to Problem 8E
Laspeyres’ price index using 2000 as the base period is 113.03.
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 113.02.
d.
Find Paasche’s index using 2000 as the base period.
d.
Answer to Problem 8E
Paasche’s index using 2000 as the base period is 112.83.
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 112.83.
e.
Find Fisher’s ideal index.
e.
Answer to Problem 8E
Fisher’s ideal index is 112.93.
Explanation of Solution
Calculation:
Fisher’s ideal index is obtained as follows:
Thus, Fisher’s ideal index is 112.93.
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Chapter 17 Solutions
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