Question

Using the following data and 2008 as the base period, compute simple aggregative price indices for the two fuels.

Item	Producer's Price (in ₹)
	2008	2009	2010
Coal ( ₹)	5	3	4
Crude oil ( ₹)	2	3	4

Answer 1

Item	Prices in 2008 (p0)	Prices in 2009 (p1)	Prices in 2010 (p2)
Coal Crude oil	5 2	3 3	4 4
	∑ p0 = 7	∑ p1 = 6	∑ p2 = 8

$$\begin{gathered} p_{01}=\frac{\mathrm{\Sigma }{p}_1}{\mathrm{\Sigma }{p}_0}\times 100=\frac{6}{7}\times 100=85.71 \\ {p}_{02}=\frac{\mathrm{\Sigma }{p}_2}{\mathrm{\Sigma }{p}_0}\times 100=\frac{8}{7}\times 100=114.28 \end{gathered}$$
Thus, index number for 2009 is 85.71 and index number for 2010 is 114.28