Correct Answer - Option 1 : net increase of 2.5% in price.
Fomula used
Simple aggregative method = P01 = ∑p1/∑p0 × 100
∑p1 = Price of all commodities in the current year
∑p0 = Price of all commodities in base year
Calculation:
∑p0 = 600 + 700 + 400 + 300 = 2000
∑p1 = 700 + 600 + 480 + 270 = 2050
Net Price changes in Percentage
= P01 = 2050/2000 × 100
= 102.5
∴ The price of commodities in 2017 is increased by 2.5% from 2016
Simple Aggregative Method = In it the total price of commodities in a given (current) year is divided by the total price of commodities in a base year and expressed as a percentage.
Formula =
P01 = ∑p1/∑p0 × 100
∑p1 = Price of all commodities in the current year
∑p0 = Price of all commodities in base year