SEMESTER FALL 2016

MICROECONOMICS (ECO402)
ASSIGNMENT # 01

DUE DATE: 23TH NOVEMBER, 2016

MARKS: 15

The Case:
Role of Statistics is very important in planning, policymaking and research
in the modern world. Consumer Price Index (CPI) is recognized as a
common indicator of general inflation. In Pakistan, current CPI series cover
40 urban centers of Pakistan. The current CPI covers 487 items in the
basket of goods and services which represent taste, habits and customs of
the people. Suppose we have only three items such as wheat, potato and
petrol. Information about their nominal prices and consumer price index
(CPI) from year 2012 to year 2014 is giver below:

Year Nominal Price of wheat/10 kg CPI

2012 275.00 169.62
2013 356.50 212.47
2014 335.50 210.63

Year Nominal Price of Potato/kg CPI

2012 35.63 204.38
2013 52.16 295.14
2014 69.00 466.16

Year Nominal Price of Petrol/liter CPI

2012 103.42 193.27
2013 113.70 195.25
2014 104.10 187.14

Requirements:
Keeping in mind the above scenario, solve the following questions.

a. By assuming 2012 as base year, find real price of wheat, potato and
petrol in each year.
 b. If base year bundle have 10 kg wheat, 1 kg potato and 1 liter petrol
than find Laspeyres index by assuming 2012 as base year and 2014
as current year.

Marks: (09+6)

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