The following table reports prices and usage quantities of three products for the years 2005 and 2006
|
Items
|
Quantity
|
Unit Prices
|
|
2005
|
2006
|
2005
|
2006
|
|
A
|
400
|
450
|
10
|
12
|
|
B
|
300
|
350
|
12
|
15
|
|
C
|
150
|
200
|
20
|
25
|
A) Compute a weighted aggregate price index for the three items using the Laspeyres method
B) Compute a weighted aggregate price index for the three items using the Paasche method
C) Comment on the cost of living in the year 2005 as compared to the 2006
D) Which method do you prefer, the Laspeyres of the Passche?