16-8. Consider the following median selling prices ($thousands) for homes in a community:

 

 

 

 

 

a.     Determine a relative index for each type of advertisement using year 1 as the base year.

 

b.    Determine an unweighted aggregate index for the two types of advertisement.

 

c.     In year 1 the retailer spent 30% of the advertisement budget on radio advertising. Construct a Laspeyres index for the data.

 

d.    Using year 1 as the base, construct a Paasche index for the same data.

 

 

 

Business Applications

 

Problems 16-10 through 16-13 refer to Gallup Construc- tion and Paving, a company whose primary business has been constructing homes in planned communities in the upper Midwest. The company has kept a record of the relative cost of labor and materials in its market areas for the last 11 years. These data are as follows:

 

 

 

 

 

 

 

Year Price 1 320 2 334 3 329 4 344 5 358 6 347 7 383 8 404 9 397   Â

 

1999 30.10 66,500 2000 30.50 68,900 2001 31.70 70,600 2002 32.50 70,900 2003 34.00 71,200 2004 35.50 71,700 2005 35.10 72,500 2006 35.05 73,700 2007 34.90 73,400 2008 33.80 74,100   Â

   Year       Hourly Wages ($)    Average Material Cost ($)                 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      10              411   

 

 

 

a.     Use year 1 as a base year and construct a simple index number to show how the median selling price has increased.

 

 

 

 

 

 

 

 

 

   2009                   34.20                                74,000                  

 

 

 

CHAPTER 16  | Analyzing and Forecasting Time-Series Data                                                                                                          723