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Exercises · Q11
Q.

Calculate Fisher's ideal price index number for the data below.

Commodityp0p_0q0q_0p1p_1q1q_1
A10121215
B7151020
C520625
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Products table:

Commodityp0p_0q0q_0p1p_1q1q_1p0q0p_0q_0p1q0p_1q_0p0q1p_0q_1p1q1p_1q_1
A10121215120144150180
B7151020105150140200
C520625100120125150
Total325414415530

Fisher's ideal index:

P01F=∑p1q0∑p0q0×∑p1q1∑p0q1×100=414325×530415×100.P_{01}^{F} = \sqrt{\frac{\sum p_1 q_0}{\sum p_0 q_0}\times\frac{\sum p_1 q_1}{\sum p_0 q_1}}\times100 = \sqrt{\frac{414}{325}\times\frac{530}{415}}\times100.

Compute the inside: 414325=1.27385\dfrac{414}{325}=1.27385 (Laspeyre) and 530415=1.27711\dfrac{530}{415}=1.27711 (Paasche); their product is 1.626841.62684. Then

P01F=1.62684×100=1.27548×100=127.55.P_{01}^{F} = \sqrt{1.62684}\times100 = 1.27548\times100 = 127.55.

Independent check (ratio form). 414×530325×415=219420134875=1.62684\dfrac{414\times530}{325\times415} = \dfrac{219420}{134875} = 1.62684, and 1.62684=1.27548\sqrt{1.62684}=1.27548 — the same, so PF=127.55P^{F}=127.55.

✓Final answer

P01F≈127.55P_{01}^{F} \approx 127.55.

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