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Practice Questions · Q8
Q.

Three commodities X, Y and Z are consumed by a household. Compute the price index number for 2024 by (a) the Simple Aggregate Method and (b) the Weighted Aggregate Method (weight =q0=q_0), and state which commodity's price change most influences EACH index.

Commodityp0p_0 (Rs.)p1p_1 (Rs.)q0q_0
X101520
Y50552
Z5201
West Bengal WbchseTextbookSubjectiveImportance★★★★★est
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  1. Simple Aggregate Method.

    Σp0=10+50+5=65,Σp1=15+55+20=90\Sigma p_0=10+50+5=65, \qquad \Sigma p_1=15+55+20=90

    P01=9065×100=138.46P_{01}=\dfrac{90}{65}\times100=138.46

    The total price rise here is 90−65=2590-65=25. Splitting this by commodity: X contributes 15−10=515-10=5, Y contributes 55−50=555-50=5, and Z contributes 20−5=1520-5=15 — so Z ALONE accounts for 1525=60%\dfrac{15}{25}=60\% of the entire measured rise, even though Z is bought in the smallest quantity of the three (only 1 unit).
  2. Weighted Aggregate Method (weight w=q0w=q_0):

    Σp0q0=10(20)+50(2)+5(1)=200+100+5=305\Sigma p_0 q_0 = 10(20)+50(2)+5(1) = 200+100+5=305

    Σp1q0=15(20)+55(2)+20(1)=300+110+20=430\Sigma p_1 q_0 = 15(20)+55(2)+20(1) = 300+110+20=430

    P01=430305×100=140.98P_{01}=\dfrac{430}{305}\times100=140.98 …

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