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7. Cost of living Index number example ( Enter your problem )
  1. Index number by Aggregate expenditure method Example-1
  2. Index number by Family budget method Example-2

1. Index number by Aggregate expenditure method Example-1





1. Find Cost of living Index number by the Aggregate expenditure method
ItemQuantityPrice0Price1
A351618
B254045
C2060120
D108090
E203045
F152835


Solution:
Aggregate expenditure method :
ItemQuantity
`q_0`
Price
`p_0`
Price
`p_1`
`p_0q_0``p_1q_0`
A351618560630
B25404510001125
C206012012002400
D108090800900
E203045600900
F152835420525
------------------
Total`sum p_0q_0=4580``sum p_1q_0=6480`


Consumer price index number by Aggregate expenditure method

`I_L=(sum p_1q_0)/(sum p_0q_0) xx 100`

`=(6480)/(4580) xx 100`

`=141.48`

Thus, there is a rise of `(141.48-100)=41.48%` in Aggregate expenditure
2. Find Cost of living Index number by the Aggregate expenditure method
ItemQuantityPrice0Price1
A40160200
B25400600
C55070
D201018
E1023


Solution:
Aggregate expenditure method :
ItemQuantity
`q_0`
Price
`p_0`
Price
`p_1`
`p_0q_0``p_1q_0`
A4016020064008000
B254006001000015000
C55070250350
D201018200360
E10232030
------------------
Total`sum p_0q_0=16870``sum p_1q_0=23740`


Consumer price index number by Aggregate expenditure method

`I_L=(sum p_1q_0)/(sum p_0q_0) xx 100`

`=(23740)/(16870) xx 100`

`=140.72`

Thus, there is a rise of `(140.72-100)=40.72%` in Aggregate expenditure
3. Find Cost of living Index number by the Aggregate expenditure method
ItemQuantityPrice0Price1
A4022.50
B2033.25
C101.51.75


Solution:
Aggregate expenditure method :
ItemQuantity
`q_0`
Price
`p_0`
Price
`p_1`
`p_0q_0``p_1q_0`
A4022.580100
B2033.256065
C101.51.751517.5
------------------
Total`sum p_0q_0=155``sum p_1q_0=182.5`


Consumer price index number by Aggregate expenditure method

`I_L=(sum p_1q_0)/(sum p_0q_0) xx 100`

`=(182.5)/(155) xx 100`

`=117.74`

Thus, there is a rise of `(117.74-100)=17.74%` in Aggregate expenditure




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