Question

Construct the cost of living index number for the year 2006.

Answer 1

Cost of living index = \(\frac {∑p_1q_0}{∑p_0q_0}\) ; 

Here base year quantities are given. 

So use Aggregative expenditure method.

Cost of living index = \(\frac{1089}{821} \times 100\) 

= 132.64