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Construct the Cost of Living Index for 2018 on the basis of 2004 from the following data and give your comments:
`{:("Item","Prices in 2004","Prices in 2018","Weights"),(, " (Rs.)"," (Rs.)",),("Food", " 39"," 47"," 4"),("Fuel"," 8 "," 12"," 1"),("Clothing"," 14"," 18"," 3"),("Rent"," 12"," 15"," 2"),("Miscellaneous"," 25"," 30"," 1"):}`

Text Solution

Verified by Experts

Since weights are directly given along with the prices in 2004 and 2018, we first determine price relatives (P) and then multiply it with weights (W).

Cost of Living Index = `(SigmaRW)/(SigmaW)`
`=(1,387.75)/(11)`
`= 126.16`
It shows that the cost of living has gone up by `26.16%` in 2018 compared to 2004.
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