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The Table Below Shows the Prices and Quantities of Three \quad

Question 51

Essay

The table below shows the prices and quantities of three commodities for six consecutive
years.
\quad \quad \quad \quad Commodity A\text {Commodity A}\quad \quad Commodity B\text {Commodity B}\quad Commodity C\text {Commodity C}
 Year  Price  Quantity  Price  Quantity  Price  Quantity 125012001213200675180022551500115350070019003253270012824007142100425518001262800721250052592100129270072531006261200013525007343900\begin{array} { c c c c c c c } \hline \text { Year } & \text { Price } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } & \text { Quantity } \\\hline 1 & 250 & 1200 & 121 & 3200 & 675 & 1800 \\2 & 255 & 1500 & 115 & 3500 & 700 & 1900 \\3 & 253 & 2700 & 128 & 2400 & 714 & 2100 \\4 & 255 & 1800 & 126 & 2800 & 721 & 2500 \\5 & 259 & 2100 & 129 & 2700 & 725 & 3100 \\6 & 261 & 2000 & 135 & 2500 & 734 & 3900 \\\hline\end{array} a. Compute the Laspeyres price index for the six-year period, using Year 1 as the base period.
b. Compute the Paasche price index for the six-year period, using Year 1 as the base period.
c. Plot the Laspeyres and Paasche indexes on the same graph. Comment on the
differences.

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