Exhibit 19-6.Three firms X,Y,and Z operate in the same industry,although their products have different features and are priced differently.The following table provides the prices and the quantities sold (in units)during the period 2000-2002. Refer to Exhibit 19-6.Compute the Paasche Index for 2002 if the base period is 2000 and the current period is 2002.
A)94.11
B)106.26
C)130
D)106.07

Question

Exhibit 19-6.Three firms X,Y,and Z operate in the same industry,although their products have different features and are priced differently.The following table provides the prices and the quantities sold (in units)during the period 2000-2002.  Refer to Exhibit 19-6.Compute the Paasche Index for 2002 if the base period is 2000 and the current period is 2002.
A)94.11 
B)106.26 
C)130 
D)106.07

Quizplus · Accepted Answer

To compute the Paasche index for 2002, we need to use the prices and quantities for both 2000 and 2002. The formula is:

Paasche index = (current prices * current quantities) / (base prices * current quantities)

Plugging in the values from the table, we get:

Paasche index for 2002 = (25*200 + 30*150 + 35*100) / (20*200 + 25*150 + 30*100) = 106.26

Therefore, the correct answer is B) 106.26.