Question

Calculate price index for the following data by applying weighted average of price relative method.

Item	Price in 1991 (Rs)	Price in 1992 (Rs)	Quantity in 1991
wheat	2.00	2.50	40 kg
sugar	3.00	3.25	20 kg
Milk	1.50	1.75	10 litre

• A. 116.64
• B. 117.74
• C. 165.43
• D. 113.34

Answer 1

Answer: (B)

117.74

$Item$	$Pricein1991\left(Rs\right)$ $P_0$	$Pricein1992\left(Rs\right)$ $P_1$	$weight$	$P_{0}w$	$P_{1}w$
$Wheat$	$2.00$	$2.50$	$40Kg$	$80$	$100$
$Sugar$	$3.00$	$3.25$	$20Kg$	$60$	$65$
$4Milk$	$1.50$	$1.75$	$10liter$	$15$	$17.5$
$Total$				$\sum P_{0}w=155$	$\sum P_{1}w=182.5$

$\Rightarrow$ $P_{01}=\frac{\sum P_{1}w}{\sum P_{0}w}\times 100=\frac{182.5}{155}\times 100=117.74$