Concept explainers
a.
Develop a simple price index using 2000 as the base period.
a.
Answer to Problem 7E
The simple price index using 2000 as the base period is given below:
Item | Price ($) (2000) | Price ($) (2017) | Simple Price Index |
Washer | 0.07 | 0.10 | 142.9 |
Cotter pin | 0.04 | 0.03 | 75 |
Stove bolt | 0.15 | 0.15 | 100 |
Hex nut | 0.08 | 0.10 | 125 |
Explanation of Solution
Calculation:
The simple price index using 2000 as the base period is obtained as follows:
Item | Price ($) (2000) | Price ($) (2017) | |
Washer | 0.07 | 0.10 | |
Cotter pin | 0.04 | 0.03 | |
Stove bolt | 0.15 | 0.15 | |
Hex nut | 0.08 | 0.10 |
b.
Develop a simple aggregate price index using 2000 as the base period.
b.
Answer to Problem 7E
The simple aggregate price index using 2000 as the base period is 111.76.
Explanation of Solution
Calculation:
The simple aggregate price index using 2000 as the base period is obtained as follows:
Thus, the simple aggregate price index using 2000 as the base period is 111.76.
c.
Find Laspeyres’ price index using 2000 as the base period.
c.
Answer to Problem 7E
Laspeyres’ price index using 2000 as the base period is 102.92.
Explanation of Solution
Calculation:
Laspeyres’ price index using 2000 as the base period is obtained as follows:
Thus, Laspeyres’ price index using 2000 as the base period is 102.92.
d.
Find Paasche’s index using 2000 as the base period.
d.
Answer to Problem 7E
Paasche’s index using 2000 as the base period is 103.32.
Explanation of Solution
Calculation:
Paasche’s index using 2000 as the base period is obtained as follows:
Thus, Paasche’s index using 2000 as the base period is 103.32.
e.
Find Fisher’s ideal index.
e.
Answer to Problem 7E
Fisher’s ideal index is 103.12.
Explanation of Solution
Calculation:
Fisher’s ideal index is obtained as follows:
Thus, Fisher’s ideal index is 103.12.
Want to see more full solutions like this?
Chapter 17 Solutions
STATISTICAL TECHNIQUES FOR BUSINESS AND
- The prices have increased/changed from the last question please read carefullyarrow_forwardIf a quarterly seasonal index is 1.16, it implies that a. the quarter's sales are 1.6% of the yearly average b. the quarter's sales are 16% above the yearly average c. he other three quarterly percentages will total 84% d. the quarter's sales are 16% of yearly total salesarrow_forwardUse the following price information for selected items for 2010 and 2018. Production figures for those two periods are also given.arrow_forward
- 4. The following table provides the average price of Regular Grade of gasoline for 4 years. Use 2015 as the reference value, complete the table by calculating the price index for each year. Show all your calculation in the space provided. Date 2013 2014 2015 2016 Regular Grade Gasoline Prices Price $3.505 $3.358 $2.429 $2.143 Price Indexarrow_forwardThe following tables consists of Prices and Consumption for three types of energy products in Australia from 2011 to 2021 Year 2011 2021 Year 2011 2021 Solar 7 4 Prices ($) Solar 15 17 Natural Gas 26 34 Consumption (Qty) Natural Gas 4 6 Wind 9 6 Wind 12 18 i. Using 2021 as the current year, calculate the Paasche aggregate price index. Show your calculations. ii. Interpret the Paasche price index.arrow_forwardQ. 7 How do you construct of cost of living index number.arrow_forward
- The marketing manager of "ABC Tapes" wants to assess the competitiveness of the company's product in the market. Table 1 represents the prices and quantities of blank cassette tapes sold in January 2016 and January 2020. TABLE 1 2016 2020 Length of tapes Price Quantity Price Quantity 30 minutes R 4.00 32 R 5.60 40 60 minutes R 4 30 150 R 6.15 190 90 minutes R 4.60 100 R 7.40 130 Using 2016 as base and calculate for 2020 the following: Determine the Laspeyres price index: a) 149.492 Ob) 149.367 Oc) 66.949 d) 66.893arrow_forwardThe table below shows the share of income going to each quintile of the income distribution for Neverland in 1980 and 1990. Complete the table below finding the the cumulative share of income for 1980 and 1990 and answer the following: Share of income in Cumulative share of Share of income in Cumulative share of Quintiles 1980 income in 1980 1990 income in 1990 1st 7% 6.6.% 2nd 11.5% 11.5% 3rd 17% 16.3% 4th 24.8% 22.7% 5th 39.7% 42.9% a) Sketch the Perfect Equality line and the Lorenz curve for 1980 and for 1990. Don't forget to label your graph and your curves! b) According to the Lorenz curves that you draw in (a), which year had worse income inequality, 1980 or 1990? JUSTIFY your answer! NOTE: This is a file upload question. Work your answer in a piece of paper, take a picture and upload your file.arrow_forwardConsider the table of prices (£): Turnip Broccoli 2016 10 12 2017 2018 14 18 13 17 The fixed quantities for turnip and broccoli are 26.5kg and 27.8kg, respectively. What is the aggregated index using the Basket of Goods approach in 2018 based in 2017? (1 d.p.)arrow_forward
- Q1. The table provided gives data on indexes of output per hour (X) and real compensation per hour (Y) for the business and nonfarm business sectors of the U.S. economy for 1960–2005. The base year of the indexes is 1992 = 100 and the indexes are seasonally adjusted. a. Plot Y against X for the two sectors separately. b. What is the economic theory behind the relationship between the two variables? Does the scattergram support the theory? c. Estimate the OLS regression of Y on X. Note: on the table ( 1. Output refers to real gross domestic product in the sector. 2. Wages and salaries of employees plus employers’ contributions for social insurance and private benefit plans. 3. Hourly compensation divided by the consumer price index for all urban consumers for recent quarters.) Thank you!arrow_forwardA price relative was computed for houses. The base period is 2005. The price relative in 2010 was 130. The interpretation of the price relative is that a. there has been a 130% increase in the price of houses from 2005 to 2010. b. there has been a 30% increase in the price of houses from 2005 to 2010. c. the price of houses in 2010 was $130 higher than the price in 2005. d. It is impossible to interpret the index.arrow_forwardIn 2010, MonsterCollege surveyed 1250 U.S.college students expecting to graduate in the next several years.Respondents were asked the following question:What do you think your starting salary will be at your firstjob after college?The line graph shows the percentage of college students whoanticipated various starting salaries. Use the graph to solveExercises 9–14. What starting salary was anticipated by the greatestpercentage of college students? Estimate the percentage ofstudents who anticipated this salary? What starting salary was anticipated by the least percentageof college students? Estimate the percentage of students whoanticipated this salary? What starting salaries were anticipated by more than 20% ofcollege students? Estimate the percentage of students who anticipated astarting salary of $40 thousand.arrow_forward
- MATLAB: An Introduction with ApplicationsStatisticsISBN:9781119256830Author:Amos GilatPublisher:John Wiley & Sons IncProbability and Statistics for Engineering and th...StatisticsISBN:9781305251809Author:Jay L. DevorePublisher:Cengage LearningStatistics for The Behavioral Sciences (MindTap C...StatisticsISBN:9781305504912Author:Frederick J Gravetter, Larry B. WallnauPublisher:Cengage Learning
- Elementary Statistics: Picturing the World (7th E...StatisticsISBN:9780134683416Author:Ron Larson, Betsy FarberPublisher:PEARSONThe Basic Practice of StatisticsStatisticsISBN:9781319042578Author:David S. Moore, William I. Notz, Michael A. FlignerPublisher:W. H. FreemanIntroduction to the Practice of StatisticsStatisticsISBN:9781319013387Author:David S. Moore, George P. McCabe, Bruce A. CraigPublisher:W. H. Freeman