Question
Calculate Price Index number from the given data:
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Answer
| Commodity | Base Year price $2005 (P0)$ | Current Year price $2006(P1)$ |
| A | $6$ | $8$ |
| B | $16$ | $18$ |
| C | $24$ | $28$ |
| D | $4$ | $6$ |
| Total | $\sum p0 = 50$ | $\sum p1 = 60$ |
Add the price of base year $(p_0)$
Add the price of current year $(p_1)$
$\begin{aligned} & P_{01}=\frac{\Sigma p_1}{\Sigma p_0} \times 100 \\ & =\frac{60}{50} \times 100 \\ & =120\end{aligned}$
Hence $P01 = 120$
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