Stats 7

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Zimbabwe Open University *

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403

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Economics

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Nov 24, 2024

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QUESTION FIVE (5) 5.1 Calculate and interpret the simple price index for the textbook. Price relative 500/450 x 100% = 111,11 In this case, the simple price index for Chalk is 125, which means that the price of textbooks has increased by 11,11% compared to the base year. 5.2 The simple quantity index for chalk. (15.00 / 12.00) * 100 = 125. In this case, the simple quantity index for Chalk is 125, which means that the price of Chalk has increased by 25% compared to the base year. 5.3 the Laspeyre’s price Index Laspeyres Price Index year - (15 x 15.0) + (7x6.99) + (1x500) + (4x54) x 100 118.24 (12 x 15.0) + (5.60 x 7) + (450 x 1) + (42 x 4) The Laspeyres price index of approximately 118.24 indicates that the overall price level has increased by about 18.24 from the base year to the current yea. 5.4 The Paasche’s quantity index Po Qo P1 Q1 P1Q1 P1Q0 P0Q1 Chalk 12 15 15 12 180 225 144 Redpen 5,6 7 6,99 8 55,92 48,93 44,8 Textboo k 450 1 500 1 500 500 450 Aspirin box 42 2 54 5 270 108 210 1005,92 881,93 848,8
𝑃𝑎𝑎𝑠𝑐 ℎ 𝑒 𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑑𝑒𝑥 = 1005,95/848,8 X 100 = 118,51 This represents an Increase in price 18,50 𝑃𝑎𝑎𝑠𝑐 ℎ 𝑒 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐼𝑛𝑑𝑒𝑥 = 1005,92/881,93 X 100 = 114,05 This represents an Increase in price 14.05%
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