A large manufacturer purchases an identical component from three independent suppliers that differ in unit price and quantity supplied. The relevant data for 2012 and 2014 are given here. Unit Price...


A large manufacturer purchases an identical component from three independent suppliers that differ in unit<br>price and quantity supplied. The relevant data for 2012 and 2014 are given here.<br>Unit Price ($)<br>Supplier Quantity (2012)<br>2012<br>2014<br>A<br>100<br>4.95<br>5.50<br>B<br>200<br>5.60<br>5.95<br>120<br>5.50<br>6.20<br>(a) Compute the price relatives for each of the component suppliers separately. Compare the price increases<br>by the suppliers over the two-year period.<br>(b) Compute an unweighted aggregate price index for the component part in 2014.<br>(c) Compute a 2014 weighted aggregate price index for the component part. What is the interpretation of<br>this index for the manufacturing firm?<br>

Extracted text: A large manufacturer purchases an identical component from three independent suppliers that differ in unit price and quantity supplied. The relevant data for 2012 and 2014 are given here. Unit Price ($) Supplier Quantity (2012) 2012 2014 A 100 4.95 5.50 B 200 5.60 5.95 120 5.50 6.20 (a) Compute the price relatives for each of the component suppliers separately. Compare the price increases by the suppliers over the two-year period. (b) Compute an unweighted aggregate price index for the component part in 2014. (c) Compute a 2014 weighted aggregate price index for the component part. What is the interpretation of this index for the manufacturing firm?

Jun 04, 2022
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