Statistics: Index Numbers · Class 11 · CBSE · Commerce Economics
A consumer price index is calculated using the family budget method. The price relatives of food, clothing and housing are 150, 120 and 100 respectiv…
Practice question from Statistics: Index Numbers (Class 11 · CBSE · Commerce Economics), with the correct answer and a step-by-step solution.
medium · MCQ · Q-4FB191
A consumer price index is calculated using the family budget method. The price relatives of food, clothing and housing are 150, 120 and 100 respectively, while their weights are 40, 35 and 25. What is the consumer price index?
- A.117
- B.122
- C.127Correct answer
- D.135
Solution
CPI = (150 × 40 + 120 × 35 + 100 × 25) / 100 = 127. The weights ensure that items with greater importance have a greater influence on the index.
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