Question

Construct the index number for 1991 taking 1990 as the base year from the following data by simple average of price relative method.

Commodity	A	B	C	D	E
Price in 1990	100	80	160	220	40
Price in1991	140	120	180	240	40

• A. 122.32
• B. 130.14
• C. 114.56
• D. 124.53

Answer 1

The correct option is A 122.32

$Commodity$	$Pricein1991$ $P_0$	$Pricein1991$ $P_1$	$Pricerelative$ $\frac{P_1}{P_0}\times 100$
$A$	$100$	$140$	$140$
$B$	$80$	$120$	$150$
$C$	$160$	$180$	$112.5$
$D$	$220$	$240$	$109.09$
$E$	$40$	$40$	$100$
$Total$			$611.59$

$\therefore$ By using simple average of price relative method,

$\Rightarrow$ $P_{01}=\frac{\sum P_{01}}{N}=\frac{611.59}{5}=122.32$