Assume that there are three types of commodities (A,B and C)that are consumed at the base-year quantities and prices as shown in the following table: What is the price index at the end of 2013?

Question

Assume that there are three types of commodities (A,B and C)that are consumed at the base-year quantities and prices as shown in the following table:  What is the price index at the end of 2013?

Quizplus · Accepted Answer

To calculate the price index at the end of 2013, we need to use the Laspeyres price index formula.

Price index = (total cost at current year prices / total cost at base year prices) x 100

Total cost at base year prices = (20 x 3) + (25 x 4) + (30 x 2) = 175
Total cost at current year prices = (22 x 3) + (23 x 4) + (31 x 2) = 181

Using the formula, we get:

Price index = (181 / 175) x 100
Price index = 1.0461538

Therefore, the correct answer is C.

Assume That There Are Three Types of Commodities (A,B and C)that