Prices and quantities for two items are as follows: Base year: Item X price $2, quantity 15; Item Y price $5, quantity 4 Current year: Item X price $3, quantity 8; Item Y price $6, quantity 6 What is the Laspeyres price index for the current year (base year = 100), to one decimal place?

Correct answer: C) 138.0

Explanation

A Laspeyres price index weights prices by base-year quantities: sum(p1 x q0) / sum(p0 x q0) x 100. Current prices x base quantities = (3 x 15) + (6 x 4) = 45 + 24 = 69. Base prices x base quantities = (2 x 15) + (5 x 4) = 30 + 20 = 50. Index = 69 / 50 x 100 = 138.0. Using current quantities would give the Paasche index of 60 / 46 x 100 = 130.4.