Consider the following table. It provides the price and quantity data for three brands of a good. a. Compute the weighted aggregate price index using the Laspeyres method with 2008 as the base year.
B) Compute the weighted aggregate price index using the Paasche method with 2008 as the base year.
C) Suppose the new price and quantity data was available for the base year of 2000 instead of 2008. Would this lead to a substantial difference between the two indices? Explain your answer.

Question

Consider the following table. It provides the price and quantity data for three brands of a good.  a. Compute the weighted aggregate price index using the Laspeyres method with 2008 as the base year.
B) Compute the weighted aggregate price index using the Paasche method with 2008 as the base year.
C) Suppose the new price and quantity data was available for the base year of 2000 instead of 2008. Would this lead to a substantial difference between the two indices? Explain your answer.

Quizplus · Accepted Answer

The Answer of Consider the following table. It provides the price and quantity data for three brands of a good.  a. Compute the weighted aggregate price index using the Laspeyres method with 2008 as the base year.
B) Compute the weighted aggregate price index using the Paasche method with 2008 as the base year.
C) Suppose the new price and quantity data was available for the base year of 2000 instead of 2008. Would this lead to a substantial difference between the two indices? Explain your answer.

Consider the Following Table