Question

Find the Laspeyre’s, Paasche’s and Fisher’s index numbers for the year 2015 with the base year 2014 using the following information:

Answer 1

Base year is 2014.

∴ p₀ = Price in 2014,

q₀ = Quantity in 2014,

p₁ = Price in 2015,

q₁ = Quantity in 2015.

To compute Laspeyre’s, Paasche’s and Fisher’s index numbers for the year 2015, the table of calculation is prepared as follows:

Laspeyre’s index number:

Paasche’s index number:

Fisher’s index number:

\(I_P=\sqrt{I_L \times I_P}\)

\(=\sqrt{126.72\times 126.85}\)

\(=\sqrt{16074.432}\)

= 126.78