Marshall-Edgeworth's Price Index Number is given by …………..

Answer

To find the Marshall-Edgeworth Price Index Number, we will follow these steps:

### Step 1: Understand the formula
The Marshall-Edgeworth Price Index Number (denoted as \( P_{01}^{ME} \)) is calculated using the following formula:

\[ P_{01}^{ME} = \frac{\sum (P_1 \cdot \sqrt{Q_1 + Q_0})}{\sum (P_0 \cdot \sqrt{Q_1 + Q_0})} \]

Where:
- \( P_0 \) = Price in the base period
- \( P_1 \) = Price in the current period
- \( Q_0 \) = Quantity in the base period
- \( Q_1 \) = Quantity in the current period

### Step 2: Set up the summations
We need to calculate the numerator and denominator separately.

1. **Numerator**: Calculate \( \sum (P_1 \cdot \sqrt{Q_1 + Q_0}) \)
2. **Denominator**: Calculate \( \sum (P_0 \cdot \sqrt{Q_1 + Q_0}) \)

### Step 3: Calculate the numerator
For each item in the index, multiply the current price \( P_1 \) by the square root of the sum of the current quantity \( Q_1 \) and the base quantity \( Q_0 \). Then sum these values.

### Step 4: Calculate the denominator
Similarly, for each item, multiply the base price \( P_0 \) by the square root of the sum of the current quantity \( Q_1 \) and the base quantity \( Q_0 \). Then sum these values.

### Step 5: Divide the numerator by the denominator
Finally, divide the total from the numerator by the total from the denominator to get the Marshall-Edgeworth Price Index Number.

### Step 6: Interpret the result
The resulting value gives you the price index number, which indicates how the price level has changed relative to the base period.

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