Question

Calculate a price index for the following by using price relative method:

Commodity	A	B	C	D	E
Price in 1991 (in Rs)	20	40	60	80	100
Price in 1992( in Rs)	70	45	70	90	105

• A. 152.24
• B. 153.33
• C. 159.33
• D. 161.24

Answer 1

Answer: (C)

159.33

$Commodity$	$Pricein1991$ $(inRs.)$ $P_0$	$Pricein1992$ $(inRs.)$ $P_1$	$PriceRelative$ [$\frac{P_1}{P_0}\times 100$ ]
$A$	$20$	$70$	$350$
$B$	$40$	$45$	$112.5$
$C$	$60$	$70$	$116.66$
$D$	$80$	$90$	$112.5$
$E$	$100$	$105$	$105$
$Total$			$796.66$

$\Rightarrow$ Price index by using price relative method = $\frac{\sum \frac{P_1}{P_0}\times 100}{N}=\frac{796.66}{5}=159.33$