The following are prices and consumption quantities for three commodities in 2009 and 2019: Commodity 2009 2019 Price Quantity Price Quantity A $2 15 $5 17 B $32 4 $28 3 C $5 20 $7 15 Based on the above information, calculate the unweighted aggregate price index for 2019 using 2009 as the base year. Round your final answer to two decimal places.
Question
The following are prices and consumption quantities for three commodities in 2009 and 2019: Commodity 2009 2019 Price Quantity Price Quantity A 5 17 B 28 3 C 7 15 Based on the above information, calculate the unweighted aggregate price index for 2019 using 2009 as the base year. Round your final answer to two decimal places.
Solution
To calculate the unweighted aggregate price index, we first need to calculate the price relative for each commodity. The price relative is the price of the commodity in the current year divided by the price of the commodity in the base year, multiplied by 100.
For commodity A: Price relative = (Price in 2019 / Price in 2009) * 100 = (2) * 100 = 250
For commodity B: Price relative = (Price in 2019 / Price in 2009) * 100 = (32) * 100 = 87.5
For commodity C: Price relative = (Price in 2019 / Price in 2009) * 100 = (5) * 100 = 140
The unweighted aggregate price index is the average of these price relatives. So,
Unweighted Aggregate Price Index = (Price relative of A + Price relative of B + Price relative of C) / 3 = (250 + 87.5 + 140) / 3 = 159.17
So, the unweighted aggregate price index for 2019 using 2009 as the base year is 159.17 (rounded to two decimal places).
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