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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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