Question

a) Calculate all the simple price indexes by using 2018 as the base year.b) Calculate the percentage change from 2020 to 2021.

Answer 1

Given:

Required:

Calculate all the simple price indexes by using 2018 as the base here.

Explanation:

The index formula is given as:

$Price\text{ index I= }\frac{cost\text{ in the current year}}{cost\text{ of the base year}}\times100$$\begin{gathered} I_{2018}=\frac{1328}{1328}\times100 \\ I_{2018}=100 \end{gathered}$$\begin{gathered} I_{2019}=\frac{1294}{1328}\times100 \\ I_{2019}=97.44 \end{gathered}$$\begin{gathered} I_{2020}=\frac{1562}{1328}\times100 \\ I_{2020}=117.62 \end{gathered}$$\begin{gathered} I_{2021}=\frac{1949}{1328}\times100 \\ I_{2021}=146.76 \end{gathered}$

(b) Percent change formula is given as:

$Percent\text{ change = }\frac{V_2-V_1}{\lvert{V_1}\rvert}\text{ }\times100$

Where v1 and v2 are the values.

$\begin{gathered} Percentage\text{ Change = }\frac{1949-1562}{1562}\times100 \\ Percentage\text{ Change = }\frac{387}{1562}\times100 \\ Percentage\text{ Change =24.76\%} \end{gathered}$

Final Answer:

(a)

$\begin{gathered} I_{2018}=100 \\ I_{2,019}=97.44 \\ I_{2,020}=117.62 \\ I_{2,021}=146.76 \end{gathered}$

(b) Percentage change = 24.76%