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Worked Examples · Example 2
Q.

Using the same four commodities and prices as before, and taking the base-year (2020) quantities consumed by the household as weights, compute the Weighted Aggregate price index number for 2024.

Commodityp0p_0 (Rs.)p1p_1 (Rs.)Base-year quantity q0q_0
Rice304510 kg
Wheat25358 kg
Sugar40555 kg
Cooking Oil1201502 litres
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✓ Free question

The Weighted Aggregate Method uses the base-year quantity q0q_0 as the weight ww for every commodity:

P01=Σp1wΣp0w×100P_{01}=\dfrac{\Sigma p_1 w}{\Sigma p_0 w}\times100

First compute p0wp_0 w for every commodity (base-year price times base-year quantity):

30(10)=300,25(8)=200,40(5)=200,120(2)=24030(10)=300,\quad 25(8)=200,\quad 40(5)=200,\quad 120(2)=240

Σp0w=300+200+200+240=940\Sigma p_0 w = 300+200+200+240 = 940

Then compute p1wp_1 w for every commodity, using the SAME weight q0q_0 as above but the current-year price:

45(10)=450,35(8)=280,55(5)=275,150(2)=30045(10)=450,\quad 35(8)=280,\quad 55(5)=275,\quad 150(2)=300

Σp1w=450+280+275+300=1305\Sigma p_1 w = 450+280+275+300 = 1305

Substituting:

P01=1305940×100=138.83P_{01}=\dfrac{1305}{940}\times100 = 138.83

Notice this weighted figure (138.83) is higher than the Simple Aggregate figure from Worked Example 1 (132.56) — here it happens because Rice and Sugar, which the household buys in the largest quantities (10 kg and 5 kg), both had comparatively large price rises.

✓Final answer

P01=138.83P_{01} = 138.83

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