pev revision paper dec 2009

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Brumi
Brumi Registered Posts: 40 Regular contributor ⭐
Can anyone help in December 2009 question 1.3b index numbers - cannot work out how to get to the answer.

Thanks

Brumi

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  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
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    Brumi wrote: »
    Can anyone help in December 2009 question 1.3b index numbers - cannot work out how to get to the answer.

    Thanks

    Brumi

    Hi,

    As you talk about index numbers, I assume you mean 1.3 b and c.

    For b you work with the seasonal variations and the underlying trend.
    In a:
    September 09
    The actual costs for 1,000 kg beans is 1,200.
    The seasonal variations are -200.
    This means the underlying costs are 1,400
    (underlying cost plus seasonal variation is actual costs, as we got the actual costs we remove the seasonal variations out of it by deducting it. writing it out would mean 1200 - - 200 = 1200 + 200 = 1400)
    October 09
    Actual costs less seasonal variations is underlying trend: 1,600 - 100 = 1,500
    November 09
    Actual costs less seasonal variations is underlying trend: 1,500 + 100 = 1,600

    So the trend for these 3 months is plus 100 every month.
    (1,400 - 1,500 - 1,600)

    Continuing from that:
    Underlying trend plus seasonal variations is actual costs
    December 09:
    Underlying trend was plus 100 each month. November is 1,600, so December is 1,600 + 100 = 1,700 = underlying trend.
    Seasonal variations is given as 100
    The actual costs is then 1,700 + 100 = 1,800

    January 10
    1,800 (1,700 + 100 as underlying trend) + - 100 = 1,700.

    February 10
    1,900 (1,800 + 100) + 205 = 2050

    So now we got the following figures for 1.3b (all per 1,000kg)
    Dec......Jan.......Feb
    1,800....1,700....2,050

    We know that in March 2009 the price per 1 kg was £1. So 1,000kg costs £1,000 pounds.

    March 2009 is the base year, so that is 100%, which is £1,000.

    To get to the new figures the formula is current year price/ base year price times base year index.

    To calculate the index figures of December:
    1800 divided by 1000 times 100 = 180
    (current year price divided by base year price times base year index)

    January would then be: 1700 divided by 1000 times 100 is 170
    February would then be: 2050 divided by 1000 times 100 is 205.

    I hope this helps!

    Cheers,
    Rinske
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    Brumi wrote: »
    Can anyone help in December 2009 question 1.3b index numbers - cannot work out how to get to the answer.

    Thanks

    Brumi

    You need to work out the trend for Sep, Oct, Nov. - notice trend increase by 100 every month

    You then need to extend the trend for Dec, jan, feb.

    from the extended trend figures you need to work backward to expected costs of 1000kg of beans using the seasonal variation.

    INDEX

    In march 2009 (Base Year = 100) the cost of beans was £1 per kg.

    Month cost index

    Mar £1000 100 (base)


    DEC £1800 180 (1800/1000 x 100)
    JAN £1700 170
    FEB £2050 205 (2050/1000 x100)


    Hope this helps
  • Brumi
    Brumi Registered Posts: 40 Regular contributor ⭐
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    Pev

    Thanks for that it was the 100 (base) I was getting confused
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