The following is the Wholesale Price Index WPI of a select list of items with the base year of 1993 94. In other words, all the item prices are made 100 in that year 1993 94. Price in all other year for an item are measured with respect to its price in the base year. For instance, the price of cement went up by 1 % in 1994 95 as compared to 1993 94. Similarly, the price of power went up by 3 % in 1996 97 as compared to 1993 94. 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 94 95 96 97 98 99 2000 01 02 03 All Items 100 102.00 102.50 104.00 103.00 105.00 106.00 108.00 107.00 106.00 Cement 100 101.00 100.50 103.00 102.50 103.50 103.10 103.80 103.70 104.00 Limestone 100 102.00 102.50 102.75 102.25 103.00 104.00 105.00 104.50 105.00 Power 100 101.50 102.50 103.00 103.50 104.00 106.00 107.00 107.50 108.00 Steel 100 101.50 101.00 103.50 104.00 104.25 105.00 105.50 106.00 105.50 Timber 100 100.50 101.50 102.00 102.50 102.00 103.00 103.50 104.00 104.50 Wages 100 101.50 103.00 103.50 104.00 104.25 104.00 104.75 104.90 105.30 Let us suppose that one bag of cement 50 kg consumes 100 kg of limestone and 10 unit of power. The only other cost item in producing cement is in the form of wages. During 1993 94, limestone, power and wages contribute, respectively, 20 %, 25 % and 15 % to the cement price per bag. The average operating profit % of price per cement bag earned by a cement manufacturer during 2002 03 is closest to A. 37.5 %В. 40 %С. 39.5 %D. 38.5 %

1 %

3 %

Given the following data:

Year	CPI of Industrial Workers (1982 = 100)	CPI of Agricultural Labourers (1986-87 = 100)	WPI (1993-94 = 100)
1995–96	313	234	121.6
1996–97	342	256	127.2
1997–98	366	264	132.8
1998–99	414	293	140.7
1999–00	428	306	145.3
2000–01	444	306	155.7
2001–02	463	309	161.3
2002–03	482	319	166.8
2003–04	500	331	175.9

Source: Economic Survey, 2004-2005, Government of India

(i) Comment on the relative values of the index numbers.

(ii) Are they comparable?

Given the following data:

Year	CPI of Industrial Workers (1982 = 100)	CPI of Urban Non-manual Employees (1984-85 = 100)	CPI of Agricultural Labourers (1986-87 = 100)	WPI (1993-94 = 100)
1995–96	313	257	234	121.6
1996–97	342	283	256	127.2
1997–98	366	302	264	132.8
1998–99	414	337	293	140.7
1999–00	428	352	306	145.3
2000–01	444	352	306	155.7
2001–02	463	390	309	161.3
2002–03	482	405	319	166.8
2003–04	500	420	331	175.9

Source: Economic Survey, Government of India 2004-2005

(i) Calculate the inflation rates using different index numbers.

(ii) Comment on the relative values of the index numbers.

(iii) Are they comparable?

The correct option is C 38.5%Option (C) is the correct answer. Check the video for the approach.