Question

Suppose seafood price and quantity data for the years 2000 and 2009 follow. Use 2000 as the base period Seafood2000 75,290 83,280 50,779 2000 2009 Qty. (Ib) Price ($/lb) Price ($/Ib) 2.23 3.09 1.97 Halibut Lobster Tuna 2.01 3.72 1.87 (a) Compute a price relative for each type of seafood. (Round your answers to one decimal place.) Seafood Price Relative Halibut 110 Lobster83 Tuna 105.3 (b) Compute a weighted aggregate price index for the seafood catch. (Round your answer to one decimal place.) 200998.6 Comment on the change in seafood prices over the nine-year period. (Enter your percentage as a positive value. Round your answer to one decimal place.) Seafood prices have decreased # by 1.4 - % over the 9-year period according to the index.

Answer 1

a) Price Relative (calculated as 2009 price / 2000 price multiplied by 100):

Halibut: (2.23 / 2.01 )*100 = 110.9

Lobster: (309 / 372) * 100 = 83.1

Tuna: (1.97 / 1.87) * 100 = 105.3

b) The weightage/proportion of qty of each type of seafood is shown in column 3 below:

Seafood	2000 Qty (lb)	Wtd Qty	2000 Price ($/lb)	2009 Price ($/lb)
Halibut	75290	0.360	2.01	2.23
Lobster	83280	0.398	3.72	3.09
Tuna	50779	0.243	1.87	1.97

Now, Wtd average price index,

I₂₀₀₉ = Sum(Wtd Qty * 2009 Price) = 2.509

Similarly, I₂₀₀₀ = Sum(Wtd Qty * 2000 Price) = 2.656

Hence, change in seafood prices from 2000 to 2009 = ( I₂₀₀₉ - I₂₀₀₀ ) / I₂₀₀₀ = -0.0554

Hence, seafood prices have decreased by 5.54% over the 9-year period according to the index.