Question

A firm uses three raw materials E ,F ,G in processing . The price per kg of these materials are as shown:

Item	1957	1967
E	4	3
F	60	57
G	36	42

Calculate simple aggregate price index for 1967 using 1957 as the base year.

• A. 104
• B. 98
• C. 100
• D. 102

Answer 1

The correct option is D 102

$Item$	$Pricein1957$ $P_0$	$Pricein1967$ $P_1$
$E$	$4$	$3$
$F$	$60$	$57$
$G$	$36$	$42$
$Total$	$\sum P_0=100$	$\sum P_1=102$

$\Rightarrow$ $\sum P_{01}=\frac{\sum P_1}{\sum P_0}\times =\frac{102}{100}\times 100=102$

$\Rightarrow$ The price index for year $1967$, taking $1957$ base year is $102$.