Question

Following is some information regarding a town’s expenditure:

$\begin{array}{cccccc}\text{Expenses on items}& \text{Food}50\%& \text{Fuel}8\%& \text{Clothing}22\%& \text{Rent}5\%& \text{Misc}15\%\\ \text{Price (in Rs.)in 2009}& 2200& 301& 912& 500& 247\\ \text{Price (in Rs.)in 1987}& 1504& 125& 333& 300& 200\end{array}$

What is the cost of living index of the year 2000 as compared with the year 1990?

• A. 159.5
• B. 169.5
• C. 179.5
• D. 189.5

Answer 1

The correct option is C

179.5

$\sum (W\times \frac{P_1}{P_0})\times 100=[50\ast (\frac{2200}{1504})+8\ast (\frac{301}{125})+22\ast (\frac{912}{333})+5\ast (\frac{500}{300})+15\ast (\frac{247}{200}\left)\right]\times 100=(73.14+19.26+60.25+8.33+18.52)\times 100=179.5\times 100P_{01}=\left[\frac{\sum (W\times \frac{P_1}{P_0})}{\sum W}\right]\times 100=\frac{(179.5\times 100)}{100}=179.5$
Thus the cost of living has become 1.795 times in 2009 as compared with that of 1987.