Question

The information about six different items used in the furniture items is as follows. Find the index number for the year 2015 with the base year 2014 and interpret it.

Answer 1

Base year: 2014

index number \(I=\frac{\sum\,IW}{\sum W} =\frac{12380}{100} =123.80\)

Interpretation : As compared to base year 2014, the Index number of the year 2015 is obtained as 123.80. Hence, there is (123.80-100=) 23.80% increase in the price of furniture.