Exercise on Section 4
The following exercise provides extra practice on the Section 4 material.
Exercise 9 Gradgrind’s energy price index for 2011
Use the data in Table 11, and the fact that Gradgrind’s energy price index for 2010 was 117.4 (as found in Activity 18), to calculate the value of Gradgrind’s energy price index for 2011.
| Energy type: price and expenditure | 2010 | 2011 |
|---|---|---|
Gas price (£/MWh) |
28 |
30 |
Gas expenditure (£) |
23 969 |
24 282 |
Electricity price (£/MWh) |
88 |
86 |
Electricity expenditure (£) |
2 920 |
3 117 |
Discussion
The gas price ratio for 2011 relative to 2010 is
The electricity price ratio for 2011 relative to 2010 is
The overall energy price ratio for 2011 relative to 2010 is
Then the value of the index for 2011 is found by multiplying the 2010 value of the index by this overall price ratio, giving