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    Workshop 9 Weighted Averages and Indices

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    Workshop 9 Weighted Averages and Indices

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    Workshop 9 Weighted Averages and Indices

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    Quantitative Methods (BUS205)

    Workshop 9 Weighted Averages and Indices

    1. The average age of the 50 female staff in a company is 34 years, and for the 70 male staff it is 43
    years. What is the average age of all the staff in the company?

    2. A module assessment consists of an examination worth 60% and coursework worth 40%. Work
    out the overall score for each of the following students.
    (a) Nishi scores 52 % in the examination and 67% in the coursework.
    (b) Hasret scores 61% in the examination and 86% in the coursework.
    (c) Amar scores 80% in the examination and 40% in the coursework.

    3. The average salary (in £’000s) at a company over a six year period is given in the table below.
    Year 2011 2012 2013 2014 2015 2016
    Salary (in £’000) 24.2 24.7 25.3 25.6 26.1 26.3

    Giving your answers to one decimal place, calculate


    (a) A simple index for this data based on 2011,
    (b) A chain index for this data.

    4. The price in pence of a share in a stock-market quoted company over a ten-day period is:
    117, 117, 116, 117, 118, 120, 126, 152, 160, 165
    (a) Calculate a simple index for this data based on day 1 (give your answers to the nearest whole
    number).
    (b) Calculate a chain index for this data (give your answers to the nearest whole number).
    (c) Compare the two indices and comment on your results. What do you think might have happened to
    produce the effect you have noticed?

    5. A company buys two products as follows.

    Product Price Quantity Price Quantity


    in 2015 in 2015 in 2016 in 2016
    A 60 45 65 50
    B 75 40 70 55

    (a) Calculate a base-weighted index for the 2016 data based on 2015,
    (b) Calculate a current- weighted index for the 2016 data based on 2015.

    6. The following data gives, for two different years, the price (in £) and the quantities (in ‘000s) of
    three items purchased by a manufacturer for use in a production process.

    Price Quantity (‘000s)


    2015 2016 2015 2016
    Item X 40 42 12 14
    Item Y 23 27 18 18
    Item Z 15 16 7 5

    Calculate for this data in 2016 based on 2015


    (a) A base-weighted and
    (b) A current-weighted index

    What do you notice?


    7. In September 2009, the RPI was 215.3 and the CPI was 111.5. In September 2008, the RPI was
    218.4 and the CPI was 110.3.
    (a) By how many percentage points did the RPI and CPI each change over the year?
    (b) By what percentage did the RPI and CPI each change over the year?

    8. It is important that your insurance (on house contents, house fabric, etc) keeps pace with inflation –
    otherwise you may not be fully covered if you make a claim. If household contents were insured for
    £20,000 in October 2009, when the CPI stood at 111.7, for how much should they be insured for in
    January 2013 when the CPI stood at 124.4?

    9. A large employer pays an index-linked pension. The pension is linked to the RPI.
    The value of the RPI was 234.4 in April 2011, 242.5 in April 2012 and 249.5 in April 2013.
    The pension in April 2011 was £146.50.
    (a) How much was the pension in April 2012?
    (b) How much was the pension in April 2013?

    10. Nathan’s salary was £29.5K in January 2011 and £33.2K in January 2013.
    The retail prices index was 229.0 in January 2011 and 245.8 in January 2013.
    (a) Deflate Nathan’s 2013 salary to 2011 values
    (b) Work out Nathan’s percentage pay change in real terms from January 2011 to January 2013.

    11. The government of Ruritania claimed that it had ‘doubled spending on health’ between 2008 and
    2013. It is true that 10 billion ducats (the local currency) were spent in 2008 and that in 2013 the sum
    spent was 20 billion ducats.
    However, Ruritania suffers from galloping inflation, and its Retail Prices Index increased from 127 in
    2008 to 167 in 2013. Deflate the 2013 spending to 2008 values, and compare the ‘true’ rate of
    increase in spending with the claimed increase.

    Answers (to be confirmed)

    1. 39.25 years
    2. (a) 58% (b) 71% (c) 64%
    3. (a) 100.0, 102.1, 104.5, 105.8, 107.9, 108.7.
    (b) −, 102.1, 102.4, 101.2, 102.0, 100.8.
    4. (a) 100, 100, 99, 100, 101, 103, 108, 130, 137, 141.
    (b) −, 100, 99, 101, 101, 102, 105, 121, 105, 103
    (c) Discuss with lecturer.
    5. (a) Base-weighted index = 100.4 (b) Current –weighted index = 99.6.
    6. (a) Base-weighted index = 110.3 (b) Current-weighted index = 110.0.
    7. (a) RPI decreased by 3.1 percentage points; CPI increased by 1.2 percentage points
    (b) RPI decreased by 1.4%; CPI increased by 1.1%
    8. £22274 (to the nearest pound).
    9.(a) £151.56 (b) £155.94
    10.(a) £30931 (b) 4.85% increase
    11. Deflated value is 15.21 billion, so ‘true’ increase is 52.1%. Has spending doubled?

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