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Calculating a Fixed Weight Price Index

  1. Sep 23, 2014 #1
    1. The problem statement, all variables and given/known data
    m38pl7r.png
    2. Relevant equations
    I used Lespayres equation, which is (Price of item in a year X Price of quantity of base item year)/(Price of item in base year X Price of quantity of base item year)

    pZw24pU.png
    3. The attempt at a solution

    I was marked wrong, so I'm not sure what to do to make it right... but

    year 1
    wine: 10/7 (10*5)/(7*5)
    pizza: 5/6 (5*10)/(6*10)
    beer: 8/7 etc.
    The Economist: 8/7 etc.

    year 2
    Wine: 1
    pizza: 1
    Beer: 1
    The Economist: 1

    year 3
    Wine: 3/7
    pizza: 7/6
    Beer: 6/7
    The Economist: 1
     
  2. jcsd
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