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(17)What is a composite (weighted) index for housing construction costs in 2014 using the following data?...

(17)What is a composite (weighted) index for housing construction costs in 2014 using the following data?

(a) 153.5 (b) 253.5 (c) 353.5 (d) 453.5

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Answer #1

Solution:

We will find the composite index for housing constructions costs in 2014.

Following given Formula we calculate the value.

index = summation of new prices * base index/summation of old prices -----(1)

Suppose index value is 100 the percent given are the weights.

So,

summation of new prices = 70 *62+5*57+25* 53

= 4200+285+1325

= 5950

summation of before prices = 70*41 + 5*38 + 25 *33

= 2870+190+825

= 3885

Submit these values in (1)

index = 5950 * 100 / 3885

= 595000/3885

= 153.153.

Therefore, Option (a) is the answer from the given question.

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