@Mr. good morning, and thanks so much for the excellent job you are doing. I observe that the formula you used for determining the price index for 2011 in question 2 does not tally with either the Laspeyere or Passche index formulas. Using Laspeyere for example the formula should have been (PnQo/PoQo, and the answer would have been 152) but you used (PnQo/PoQn). Kindly explain why this is so, please.

The lectures do not say that. The two methods give different answers when there is a ‘basket’ of several items. They do not give different answers when there is just one item as in this question. That is why the question does not specify a method.

As I explain in my free lectures on this, the seasonal variations must add up to 0. 5.8 – 8.4 + 10.2 = + 7.6 Therefore for the total of all 4 to be zero, the missing one must be – 7.6.

abduaj1997 says

Thank You sir,

I got all 8 out of 8 correct answers.

Austine116 says

@Mr. good morning, and thanks so much for the excellent job you are doing. I observe that the formula you used for determining the price index for 2011 in question 2 does not tally with either the Laspeyere or Passche index formulas. Using Laspeyere for example the formula should have been (PnQo/PoQo, and the answer would have been 152) but you used (PnQo/PoQn). Kindly explain why this is so, please.

John Moffat says

The answer is correct and has used the standard Laspeyre formula.

The cost of 10,000 kg in 2008 was $25,0000

The cost of 10,000 kg in 2011 would have been 10,000/12,000 x $38,000 = $31,667

The price index is 31,667/25,000 = 127

L.Thenuka says

Dear John,

As per your lectures, the Answers using Laspeyre & Passche would be different from each other.

However, for Question 2 we arrived at the same answer of 127 when we use both methods.

Answer using Laspeyre;

31,667 梅 25,000 = 127

Answer using Passche;

38,000 梅 (12,000*2.5) x 100 = 127

Please be kind enough to explain this confusion.

John Moffat says

The lectures do not say that. The two methods give different answers when there is a ‘basket’ of several items. They do not give different answers when there is just one item as in this question. That is why the question does not specify a method.

MLAZIMILANO says

Thank you Sir John, splendid job as usual. this really helped.

John Moffat says

Great 馃檪

hunzlaaftab says

Hello, I do not understand how question 3 was solved. Can you please help? Many thanks

fay888888 says

could you explain how did you get -7.6? please.

John Moffat says

I assume you are asking about question 4.

As I explain in my free lectures on this, the seasonal variations must add up to 0.

5.8 – 8.4 + 10.2 = + 7.6

Therefore for the total of all 4 to be zero, the missing one must be – 7.6.

Have you watched my free lectures on forecasting?