Question

Compute the index number for the year 2015 by total expenditure method and family budget method and state whether both the index numbers are same:

Item	Item	year 2013	year 2013	year 2015
		Consumption (Quantity)	price	price
wheat	Quintle	100 kg	1800	2400
Rice	20 kg	40 kg	700	800
Suger	kg	40 kg	30	36
Oil	kg	60 kg	108	120
PUlse	20 kg	40 kg	2000	2400
Ghee	kg	36 kg	400	400

Answer 1

Here, base year is 2013 and current year is 2015.

∴ p₀ = Price in 2013,

q₀ = Quantity in 2013,

p₁ = Price in 2015 and

q₁ = Quantity in 2015

The units of price and quantity for the items wheat, rice and pulses are not equal. We compute the index number for the year 2015 by total expenditure method and family budget method after making the units of these items equal.

Explanation :

The table for calculation is prepared as follows:

Total expenditure method:

Index number for the year 2015

Family budget method:

Index number for the year 2015

Thus, the index numbers obtained by total expenditure method and family budget method are equal.