addmath paperwork 2013 price index selangor

7/28/2019 Addmath Paperwork 2013 Price Index Selangor.

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History of Index Number

Index numbers are meant to study the change in the effects of such factors which cannot be measured

directly. According to Bowley, Index numbers are used to measure the changes in some quantity which

we cannot observe directly. For example, changes in business activity in a country are not capable of

direct measurement but it is possible to study relative changes in business activity by studying thevariations in the values of some such factors which affect business activity, and which are capable of

direct measurement. Index numbers are commonly used statistical device for measuring the combined

fluctuations in a group related variables. If we wish to compare the price level of consumer items today

with that prevalent ten years ago, we are not interested in comparing the prices of only one item, but in

comparing some sort of average price levels. We may wish to compare the present agricultural

production or industrial production with that at the time of independence. Here again, we have to

consider all items of production and each item may have undergone a different fractional increase (or

even a decrease). How do we obtain a composite measure This composite measure is provided by index

numbers which may be defined as advice for combining the variations that have come in group of

related variables over a period of time, with a view to obtain a figure that represents the result of thechange in the constitute variables. Index numbers may be classified in terms of the variables that they

are intended to measure. In business, different groups of variables in the measurement of which index

number techniques are commonly used are (i)price, (ii) quantity, (iii) value and (iv) business activity.

Thus, we have index of wholesale prices, index of consumer prices, index of industrial output, index of

value of exports and index of business activity, etc. Here we shall be mainly interested in index numbers

of prices showing changes with respect to time, although methods described can be applied to other

cases. In general, the present level of prices is compared with the level of prices in the past. The present

period is called the current period and some period in the past is called the base period.

Index Numbers

Index numbers are statistical measures designed to show changes in a variable or group of related

variables with respect to time, geographic location or other characteristics such as income, profession,

etc. A collection of index numbers for different years, locations, etc., is sometimes called an index series.

Simple Index Number

A simple index number is a number that measures a relative change ina single variable with respect to a

base.

Composite Index Number

A composite index number is a number that measures an average relative changes in a group of relative

variables with respect to a base.


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PART 1

(a) Describe in brief

(i) price index,

(ii) weightage,

(iii) composite index.

Answer :

(i) Price index : an index number expressing the level ofa group of commodity prices relative to the

level of the prices of the same commodities during an arbitrarily chosen base period and used to

indicate changes in the level of prices from one period to another.

(ii) Weightage : the assignment of a quota (as of members of a legislature) to a particular segment of

the population as a special favor or concession in a proportion above that allowable on a strictly

numerical basis

(iii) (iii) Composite index : A grouping of equities, indexes or other factors combined in a standardized

way, providing a useful statistical measure of overall market or sector performance over time.


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(b) State four ways of weightage representations. Find the examples of the representations using

internet or any printed materials.

1) Pie Chart:

2) Bar Graph:


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3) Line Graph

4) Histogram


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PART 2

We often hear complaints from the public about inflation. It causes an increase in the household

expenditure in a family. The household expenditure for every family is different.a) Complete Table 1 for your family's monthly expenditure for the year 2013.

Answer:

Monthly Salary Number Of

Family

Member

Item Average

Expenditure for

the year 2013

(To Te Nearest

RM)

Percentage of

Monthly

Expenses (To

The Nearest

%)

8000 4 Food 1200 20.0

8000 Accomodation (Rental/Loan) 240 4.0

8000 4 Transportation (

Petrol/Loan/Bus Fre etc)

600 10.0

4 Clothing 210 35.0

4 Education 1500 25.0Recreation 210 3.5

Utilities

(Water/Electricity/Telephone

240 4.0

8000 Medication 1500 25.0

4 Miscellaneous 300 5.0

TOTAL 6000 100

Table 1


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(b) If we want to compare the cost of living from one year to another, we have to

calculate the price index that involves some of the items mentioned above.

(i) In order to calculate the price index of all the items above, we have to consider theaverage monthly expenses of any previous year as the base year.Select the appropriate year as the base year.

Answer:

ItemAverage MonthlyExpenditure for the base

year 2008

(RM)

Food 1000

Accomodation

(Rental / Loan)

180

Transportation

(Petrol/ Loan / Bus fareetc)

450

Clothing 120

Education 1000

Recreation 150Utilities(Water / Electricity /

Telephone)

200

Medication 700

Miscellaneous 2000

TOTAL 4000


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ii) Hence Complete Table 2 Below:

Answer:

Item Average Monthly Expenses For

The Year 2008 as the base year

(RM)

Average Monthly Expenses For

The Year 2013 (RM)

Food 1000 1200

Accomodation (Rental/Loan) 180 240

Transportation (Petrol/Loan/Bus

Fare etc)

450 600

Clothing 120 210

Education 1000 1500

Recreation 150 210

Utilities

(Water/Electricity/Telephone)

200 240

Medication 700 1500

Miscellaneous 200 300

TOTAL 4000 6000

Table 2

(c) ( i) Complete Table 3 based on the above information.

Item Price Indices For The Year 2013

Based On The Year 2008

Weightage

Food 120.00 20.0

Accomodation (Rental/Loan) 133.33 4.0Transportation (Petrol/Loan/Bus

Fare etc)

133.33 10.01

Clothing 150.00 4.0

Education 140.00 25.0

Recreation 140.00 3.5

Utilities

(Water/Electricity/Telephone

120.00 3.5

Medication 214.28 5.0

Miscellaneous 150.00 25.0

TOTAL 1335.94 100

Table 3


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Formula to calculate price index :

ii) Hence , Calculate the composite index for the average monthly expenditure

in the year 2013 based on the selected base year.

Answer :

Formula to calculate composite index

= (120.00 X 20) + (133.33 X 4) + (133.33 X 10) + (175 X 4) + (150 X 25) + (140 X 3.5) + (120 X 3.5) +

(214.28 X 5) + (150 X 25)

(20 + 4 + 10 + 4 + 25 + 3.5 + 3.5 + 5 + 25)

= 136.48


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d) Make a conclusion about your familys expenditure based on your findings .

Answer:

Based on my findings, I found that the average expense for current year is higher than the base year

2008. We spent a total of RM1200 for food in 2013 compared to only RM 1000 in 2008. Other expenses

such as accommodation, utilities, transportation, clothing, education, recreation, and medications also

increase compared to the year 2008. This is due to the high inflation rate in 2008. After the year 2008,

daily expenses for our family had increased due to the increasing of the prices of raw materials.


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addmath paperwork 2013 price index selangor

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