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From the following data, construct a pri...

From the following data, construct a price index number by using Fisher's Ideal Formula:

Text Solution

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Since we are given the expenditure and the price, we can obtain the quantity by dividing total expenditure by the price for each commodity. We can then apply Fisher's Formula.

By Fisher's Formula:
`P_(01)=sqrt((Sigmap_(1)q_(0))/(Sigmap_(0)q_(0))xx(Sigmap_(1)q_(1))/(Sigmap_(0)q_(1)))xx100`
`=sqrt((202)/(91)xx(199)/(92))xx100`
`=sqrt(4.8015)xx100`
`=2.1912 xx 100`
`= 219.12`
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