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Paasche Quantity Index

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Paasche Quantity Index


1. **State the problem:** Calculate the Paasche quantity index using 2021 as the base year. 2. **Formula:** The Paasche quantity index is given by $$\text{Paasche Quantity Index} = \frac{\sum (P_1 \times Q_2)}{\sum (P_1 \times Q_1)} \times 100$$ where $P_1$ and $Q_1$ are the prices and quantities in the base year (2021), and $Q_2$ is the quantity in the current year (2024). 3. **Given data:** | Item | $P_1$ (2021 Price) | $Q_1$ (2021 Quantity) | $Q_2$ (2024 Quantity) | |------|--------------------|-----------------------|-----------------------| | 1 | 50 | 40 | 60 | | 2 | 100 | 90 | 70 | | 3 | 140 | 20 | 110 | 4. **Calculate numerator:** $$\sum (P_1 \times Q_2) = (50 \times 60) + (100 \times 70) + (140 \times 110) = 3000 + 7000 + 15400 = 25400$$ 5. **Calculate denominator:** $$\sum (P_1 \times Q_1) = (50 \times 40) + (100 \times 90) + (140 \times 20) = 2000 + 9000 + 2800 = 13800$$ 6. **Calculate Paasche quantity index:** $$\frac{25400}{13800} \times 100 = 1.8406 \times 100 = 184.06\%$$ 7. **Interpretation:** The Paasche quantity index is 184.06%, which is not among the options given. Rechecking the problem, it seems the question might have a typo or the options correspond to a different index. **Note:** The Paasche quantity index formula uses base year prices and current year quantities, which we applied correctly. **Final answer:** The Paasche quantity index is approximately **184.1%**. Since none of the options match, please verify the data or options provided.