document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1193800>Question 1193800</A>: <I><SPAN STYLE=\"word-break: break-all;\"> An enquiry into the budgets of middle class family gave the following information:<BR>\n" );
document.write( "Expenses on 	Food 30%	Rent 15%	Clothing 20%	Fuel 10%	Others 25%<BR>\n" );
document.write( "Prices in Kwacha (K) in 2004	100	20	70	20	40<BR>\n" );
document.write( "	90	20	60	15	55\r<BR>\n" );
document.write( "\n" );
document.write( "respectively.<BR>\n" );
document.write( "Compute the price index number using weighted arithmetic maen of price relatives. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #848592 by </B><A HREF=/tutors/aboutme.mpl?userid=proyaop><B>proyaop(69)</B></A><img src=\"/images/stars/stars-08.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=proyaop><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=848592\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> **1. Calculate Price Relatives**\r<BR>\n" );
document.write( "\n" );
document.write( "| Item       | Base Year Price (K) | Current Year Price (K) | Weight (%) | Price Relative |<BR>\n" );
document.write( "|-------------|---------------------|----------------------|-------------|----------------|<BR>\n" );
document.write( "| Food        | 100                 | 90                   | 30          | 90             |<BR>\n" );
document.write( "| Rent        | 20                  | 20                   | 15          | 100            |<BR>\n" );
document.write( "| Clothing     | 70                  | 60                   | 20          | 85.71         |<BR>\n" );
document.write( "| Fuel        | 20                  | 15                   | 10          | 75             |<BR>\n" );
document.write( "| Others      | 40                  | 55                   | 25          | 137.50        |\r<BR>\n" );
document.write( "\n" );
document.write( "**2. Calculate Weighted Price Relatives**\r<BR>\n" );
document.write( "\n" );
document.write( "| Item       | Weight (%) | Price Relative | Weighted Price Relative |<BR>\n" );
document.write( "|-------------|-------------|----------------|------------------------|<BR>\n" );
document.write( "| Food        | 30          | 90             | 2700                   |<BR>\n" );
document.write( "| Rent        | 15          | 100            | 1500                   |<BR>\n" );
document.write( "| Clothing     | 20          | 85.71         | 1714.20                |<BR>\n" );
document.write( "| Fuel        | 10          | 75             | 750                    |<BR>\n" );
document.write( "| Others      | 25          | 137.50        | 3437.50                |<BR>\n" );
document.write( "| **Total** | 100         |                | **10101.70**              |\r<BR>\n" );
document.write( "\n" );
document.write( "**3. Calculate the Weighted Arithmetic Mean of Price Relatives**\r<BR>\n" );
document.write( "\n" );
document.write( "* Weighted Arithmetic Mean = (Σ (Weight * Price Relative)) / Σ Weight<BR>\n" );
document.write( "* Weighted Arithmetic Mean = 10101.70 / 100 <BR>\n" );
document.write( "* Weighted Arithmetic Mean = 101.017\r<BR>\n" );
document.write( "\n" );
document.write( "**Therefore, the price index number using the weighted arithmetic mean of price relatives is 101.017.**\r<BR>\n" );
document.write( "\n" );
document.write( "This indicates that the overall price level for the middle-class family has increased by approximately 1.017% compared to the base year.<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );