The prices and quantities of three commodities for four consecutive years are as follows: Commodity A Commodity B Commodity C Year Price Quantity Price Quantity Price Quantity 1 250 1200 121 3200 675 1800 2 255 1500 115 3500 700 1900 3 253 2700 128 2400 714 2100 4 261 2000 135 2500 734 3900 Required (80 points): a) Explain Laspeyre’s price index. b) Compute the Laspeyres price index for Year 4, using Year 1 as the base period. c) Explain Paasche’s price index d) Compute the Paasche price index for Year 3, using Year 2 as the base period
