A textile manufacturer makes casual jackets. The company buys lining fabric, interfacing fabric and outer fabric. These fabrics are cut and machined to make the garments. The prices per metre of these materials in 2001, 2002 and 2003 were:

In 2001 the company purchased 2500 metres of lining fabric, 400 metres of interfacing fabric and 2750 metres of outer fabric. In 2002 these quantities were 2800, 500 and 3200 respectively. In 2003 they were 3000, 500 and 5000 respectively.

(a) Calculate Laspeyre price indices for 2002 and 2003 using 2001 as the base period.

(b) Calculate Paasche price indices for 2002 and 2003 using 2001 as the base period.

(c) Compare your answers to (a) and (b) and account for any differences between the values of the price indices.