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Name

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Index number

CHAPTER 11 : INDEX NUMBER

11.1 Index Number
1. Index number,

2. Price index,

Q1
100
Q2

P1
100
P2

where Q0 = quantity at base time

Q1 = quantity at specific time

where P0 = price of item at base time

P1 = price of item at specific time

Calculating Price Index

1. Find the price index for the following items for the year 2007 based on 2006.
Example:
(a)
Year
2006
2007

Price of item (RM)

4
5

Year
2006
2007

Price of item (RM)

50
60

Q1
5
100 100
Q2
4
125

(b)
Year
2006
2007

[120]
(c)
Year
2006
2007

Price of item (RM)

0.80
1.20

Price of item (RM)

200
245

[150]
(d)
Year
2006
2007

[122.5]
(e)
Year
2006
2007

Price of item (RM)

24.00
27.60

[115]

Price of item (RM)

2.50
3.50

[140]

Index number

2. Find the following price indices:

Example:
Year
Price(RM)
2003
200
2005
300
2007
360
(a) Price index for the year 2005
(based on 2003)
300
I1
100 150
200
(b) Price index for the year 2007
(based on 2003)
360
I1
100 180
200
(c) Price index for the year 2007
(based on 2005)
360
I1
100 120
300

(a)
Year
2002
2005
2007

Price(RM)
40
44
70

(a) Price index for the year 2005

(based on 2002)
I1
(b) Price index for the year 2007
(based on 2002)
I1
(c) Price index for the year 2007
(based on 2005)
I1
[(a)110 (b)175 (c)159.1]

(b)
Year
2003
2004
2006

Price(RM)
2.00
2.40
3.60

(c)
Year
2000
2003
2007

Price(RM)
350
410
450

(a) Price index for the year 2004

(based on 2003)
I1

(a) Price index for the year 2003

(based on 2000)
I1

(b) Price index for the year 2006

(based on 2003)
I1

(b) Price index for the year 2007

(based on 2000)
I1

(c) Price index for the year 2006

(based on 2004)
I1

(c) Price index for the year 2007

(based on 2003)
I1

[(a)120 (b)180 (c)150]

[(a)117.1 (b)128.6 (c)109.8]

Index number

3. Calculate the index number for the following questions:

Example: Given
Item Price in
2000
(RM)
A
B

4.00
5.00

(a) Given
Price
in
2007
(RM)
4.40
6.00

Price index
in 2007
based on
2000
x
y

Item Price in
2000
(RM)
A
B

5.00
6.00

Price
in
2007
(RM)
4.50
6.60

Price index
in 2007
based on
2000
x
y

4.40
100 110
4.00
6
y 100 120
5

[x=90,y=110]
(b) Given
Item Price in
2005
(RM)
A
B

24.00
25.00

(c) Given
Price
in
2007
(RM)
30.00
24.00

Price index
in 2007
based on
2005
x
y

[x=125,y=96]

Item Price in
2003
(RM)
A
B

4.80
6.00

Price
in
2006
(RM)
6.00
4.80

Price index
in 2006
based on
2003
x
y

[x=125,y=80]

Index number

4. Calculate the price index for the following questions:

Example:
The price of a plate of chicken rice at a
school canteen increased from RM2.40 in
the year 2000 to RM3.60 in the year 2005.
Calculate the price index of a plate of
chicken rice for that school canteen in the
year 2005 based on the year 2000.

(a)
The price of 1kg of squid in the year 2001
was RM8.00. in the year 2006, it was
RM10.80 per kg. Calculate the price index
of a kg of squid in the year 2006 based on
the year 2001.

3.00
100 125
2.40
[135]

(b)
The prince of a single storey link house at a
certain locality increased fromRM150,000
in the year 1995 to RM180,000 in the year
2005. Calculate the price index of a single
storey link house in that locality in year
2005 based on the year 1995.

[120]

(d)
The price of a kg of sugar was RM1.50 in
1998. The price increased to RM1.80 in the
year 2000 and RM2.25 in the year 2002.
Calculate the price index of a kg of sugar
(i) in year 2000 based on 1998
(ii) in year 2002 based in 2000

[(a) 120 (b) 125]

(c)
The price of a packet of nasi lemak in a
certain stall increased from RM0.50 in
2000 to RM1.20 in 2006. Calculate the
price index of a packet of nasi lemak in
year 2006 based on year 2000.

[240]

(e)
The price of car X decreased from
RM33,750 in 2006 to RM27,000 in year
2007. Calculate the price index of car X in
year 2007 based on year 2006.

[80]

Index number

5. Find the item price, Q1 , for the year 2007 based on the year 2000 for each of the
following:
Example:

(a)

Year

Item Price
(RM)

2000

50

2007

120

Q1

I
Q1

(b)
Year

Price index

Year

Item Price
(RM)

2000

3.00

2007

Q1

Price index

140

Q1
100
Q0
120 50
60
100

Item Price
(RM)

2000

40

2007

Q1

[RM4.20]
(c)
Year

Price index

125

Item Price
(RM)

2000

0.80

2007

Q1

Price index

120

[RM0.96]

[RM50]
(d)
Year

Item Price
(RM)

2000

0.80

2007

Q1

(e)
Year

Price index

75

[RM0.60]

Item Price
(RM)

2000

1500

2007

Q1

Price index

115

[RM1725]

Index number

11.2 Composite Index

Composite Index,

IW
W
i

where I i = index number of the i th item,

Wi = weightage of the i th item.

1. Calculate the composite index for each of the following:

Example:
(a)
Drink Price Index
Food Price Index Weightage
P
120
A
115
2
Q
145
B
120
3
R
160
C
140
5

(115 2) (120 3) (140 5)

235
129
(b) Table below shows the price indices
and the weightages of 4 items in year 2005
based on 2000. Calculate the composite
index of all the items in year 2005 based on
2000.
Items Price Index Weightage
P
110
3
Q
115
2
R
105
4
S
120
1

Weightage
3
4
5

[110]
(d) Table below shows the price indices
and the weightages of 3 raw materials in
year 2005 based on 1999. Calculate the
composite index of all the items in year
2005 based on 1999.
Items
P
Q
R

Price Index
110
120
85

Weightage
4
5
1

[145]
(c) Table below shows the price indiced
and the weightages of 4 ingredients used in
making a certain type of biscuit in year
2004 based on 1998. Calculate the
composite index of all the ingredients in
year 2004 based on 1998.
Items Price Index Weightage
A
145
4
B
200
1
C
120
2
D
150
5
E
160
3
[150]
(e) Table below shows the price indices
and the weightages of 3 items in year 2002
based on 2000. Calculate the composite
index of all the items in year 2002 based on
2000.
Items
X
Index
110
number
weightage 3

[112.5]

Y
120

Z
80

[97]

Index number

2. Calculate the composite index for each of the following:

Example:
(a)
A
B
C
commodities
Price in
3.00
4.80
5.70
A
2006 (RM)
B
Prince in
2.50
1.20
5.00
C
2000 (RM)
D
Weightage
1
3
2

2000
5.00
10.50
8.00
18.00

2007
6.00
12.60
9.80
21.15

weightage
4
2
1
3

3.00
100 120
2.50
4.80
IB
100 400
1.20
5.70
IC
100 114
5.00
(120 1) (400 3) (114 2)
I
6
258
IA

[119.5]

(b)Table below shows the price of 5 types

of goods in the year 2000 and 2006 with
their corresponding weightages. Caculate
the composite index in 2006 based on
2000.
Goods
Price in Prince
Wieghtage
2000
in 2006
(RM)
(RM)
P
5
6
1
Q
20
23
2
R
8
12
3
S
16
18
4
T
10
13
5

[126.7]

(c) Table below shows the price of 3 raw

materials A, B, and C in the year 2000 and
2006 with their corresponding weightages.
Caculate the composite index in 2006
based on 2000.
Raw
A
B
C
Materials
Price in
4.80
2.50
5.00
2000 (RM)
Prince in
6.00
3.00
6.00
2006 (RM)
Weightage
2
5
3

[121]

Index number

3. Calculate the value of the unknown for each of the following based on the composite
index given.
Example:
(a)
Drink Prince index
weightage
Raw
Prince index weightage
materiali
A
121
5
A
155
1
B
130
6
B
120
10
C
105
n
C
150
2
D
115
3
D
135
n
Given composite index is 118, find n.
Given
composite
index
is
130,ind
n.
(121 5) (130 6) (105 n) (115 3)
11
14 n
1730 105n 118(14 n)

1730 105n 1652 118n

13n 78
n6

[7]

(b)Table shows the price indices and their

respective weightages of the items in year
2003 based on 2000. It is given that the
composite index for the items for the year
2005 based on 2000 is 121, find a.
Index No
110
120
140
weightage
5
a
3

(c) Table shows the price indices and their

respective weightages of the items in year
2000based on 1995 is given that the
composite index for the items for the year
2000 based on 1995 is 115, find b.
Index No
125
80
11
weightage
6
1
b

[2]

[5]

(d) Table shows the price indices and their

respective weightages of the items in year
2003 based on 1998. It is given that the
composite index for the items for the year
2003 based on 1998 is 112, find c.
Index No
wieghtage

110
8

120
4

150
c

85
2

[1]

(e) Table shows the price indices and their

respective weightages of the items in year
2005 based on 2000. It is given that the
composite index for the items for the year
2005 based on 2000 is 105.5, find x.
Index No
wieghtage

105
1

120
2

90
x

110
x+1

[3]

Index number

Past Year Questions

1. SPM 2003 : Paper 2
The following diagram is a bar chart indicating the weekly cost of the items P, Q, R,
S, and T for the year 1990.The following table shows the prices and the price indices
for the items.
Weekly Cost (RM)
33
30
24
15
12
0

Items

Diagram
Items

Price in 1990

Price in 1995

P
Q
R
S
T

x
RM2.00
RM4.00
RM6.00
RM2.50

RM0.70
RM2.50
RM5.50
RM9.00
z

Price index in 1995

based on 1990
175
125
y
150
120

(a) Find the value of

(i) x,
[RM0.40]
(ii) y,
[137.5]
(iii) z.
[RM3.00]
(b) Calculate the composite index for the items in the year 1995 based on the year 1990.
[140.9]

(c) The total monthly cost of the items in the year 1990 is RM456.
Calculate the corresponding total monthly cost for the year 1995.

[RM642.50]

(d) The cost of the items increases by 20% from the year 1995 to the year 2000. Find the
composite index for the year 2000 based on the year 1990.
[169.1]

Index number

2. SPM 2004 : Paper 2

The table below shows the price indices and percentage of usage of four items, P, Q,
R, and S, which are the main ingredients in the production of a type of biscuit.
Item
Price index for the year 1995 based
Percentage of usage (%)
on the year 1993
P
135
40
Q
x
30
R
105
10
S
130
20
(a) Calculate
(i) the price of S in the year 1993 if its price in the year 1995 is RM37.70. [RM29]
(ii) the price index of P in the year 1995 based on the year 1991 if its price index
in the year 1993 based on the year 1991 is 120.
[162]
(b) The composite index number of the lost of biscuit production for the year 1995
based on he year 1993 is 128.
(i)
the value of x,
[125]
(ii)
the price of a box of biscuit in the year 1993 if the corresponding price in
the year 1995 is RM32.
[RM25]
3. SPM 2005
The table below shows the prices and the price indices for the four ingredients
P, Q, R, and S, used in making biscuits of a particular kind. The diagram is a pie chart
which represents the relative amount of the ingredients P, Q, R, and S, used in making
these biscuits.
Ingredients Price per kg (RM)

P
Q
R
S

Year
2001

Year
2004

0.80
2.00
0.40
z

1.00
y
0.60
0.40

Price index for

the year 2004
based on the year
2001
x
140
150
80

P
Q
120
60
100
R

Index number

(a) Find the values of x, y and z.

[ x = 125, y =2.80, z = 0.50]
(b) (i) Calculate the composite index for the cost of making these biscuits in the year
2004 based on the year 2001.
[129.44]
(ii) Hence, calculate the corresponding cost of making these biscuits in the year 2001
if the cost in the year 2004 was RM2985.
[RM2306.09]
(c) The cost of making these biscuits is expected to increase by 50% from the year 2004
to the year 2007.
Find the expected composite index for the year 2007 based on the year 2001.
[194.16]

4. SPM 2006
A particular kind of cake is made by using four ingredients, P, Q, R, and S. Table below
shows the prices of the ingredients.
Ingredient
P
Q
R
S

Price per kilogram (RM)

Year 2004
Year 3005
5.00
w
2.50
4.00
x
y
4.00
4.40

(a) The index number of ingredient P in the year 2005 based on the year 2004 is 120.
Calculate the value of w.
[6]
(b) The index number of ingredient R in the year 2005 based on the year 2004 is 125.
The price per kilogram of ingredient R in the year 2005 is RM2.00 more than its
corresponding price in the year 2004. Calculate the value of x and of y.
[x = 8, y=10]

(c) The composite index for the cost of making the cake in the year 2005 based on the
year 2004 is 127.5. Calculate
(i)
the price of a cake in the year 2004 if its corresponding price in the year
2005 is RM30.60.
[RM24]
(ii)
the value of m if the quantities of ingredients P, Q, R, and S used are in the
ration of 7 : 3 : m : 2.
[4]