Question
a. Construct the cost-of-living index number for 2020 on the basis of 2018from the given data. Advice a donor agency on what course action to
a. Construct the cost-of-living index number for 2020 on the basis of 2018from the given data. Advice a donor agency on what course action to take if the information is meant to help them make a decision on some food stipend being for a social protection program in Kenya.
Commodities | PRICE | Weights | |
2018 | 2020 | ||
A | 200 | 400 | 50 |
B | 200 | 350 | 40 |
C | 100 | 150 | 65 |
D | 80 | 120 | 45 |
E | 60 | 180 | 20 |
F | 90 | 157.5 | 60 |
G | 300 | 585 | 100 |
b. The average prices and quantities of six items grown in Nakuru County are shown in the following table:
2020 | 2021 | |||
Items | Price (Kshs/Kg) | Quantity (Kg,000) | Price (Kshs/Kg) | Quantity (Kg,000) |
Pineapples(A) | 10 | 6 | 14 | 8 |
Oranges(B) | 10 | 8 | 15 | 14 |
Bananas(C) | 15 | 8 | 20 | 16 |
Beans(D) | 30 | 12 | 25 | 20 |
Wheat(E) | 40 | 15 | 60 | 21 |
Millet(F) | 50 | 10 | 80 | 16 |
Using 2020as base year, compute Kelly's and Fishers Price index numbers for 2021. Comment on the results.
c. Why are national income measures inadequate when comparing the standard of living between developed and developing countries?
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