Question

A large manufacturer purchases an identical component from three independent suppliers that differ in unit price and quantity supplied. The relevant data for 2012 and 2014 are given here.

		Unit Price ($)
Supplier	Quantity (2012)	2012	2014
A	150	5.45	6.00
B	200	5.60	5.95
C	160	5.50	6.70

(a)

Compute the price relatives (index number) for each of the component suppliers separately using 2012 as the base year. (Round your answers to the nearest integer.)

Item	Price Relative
A
B
C

Compare the price increases by the suppliers over the two-year period.

---Select--- All Some No prices increased, with the greatest price relative being from supplier  ---Select--- A B C and the smallest price relative being from supplier  ---Select--- A B C .

(b)

Compute an unweighted aggregate price index for the component part in 2014. (Round your answer to the nearest integer.)

I₂₀₁₄ =

(c)

Compute a 2014 weighted aggregate price index for the component part. (Round your answer to the nearest integer.)

I₂₀₁₄ =

What is the interpretation of this index for the manufacturing firm? (Round your answer to the nearest integer.)

There was a  % increase in the price of the component part over the two-year period.

Answer 1