Question

Answer the question below by clearly and step by step show your work.
Example
1. If a wooden door costs $400 in 2005 and $350 in 2006. Calculate the simple price index for 2006 using 2005 as the base year.
2. Zambia exported 12 000 bags of maize in 2004 and 14 000 in 2005. Calculate the simple quantity index for 2005 using 2004 as the base year.

Answer 1

Sure! Let's break down each question step by step.

### Question 1:
**Calculate the simple price index for 2006 using 2005 as the base year.**

1. **Identify the prices:**
- Price in 2005 = $400
- Price in 2006 = $350

2. **Use the formula for the simple price index (SPI):**
\[
\text{Simple Price Index} = \left( \frac{\text{Price in Current Year}}{\text{Price in Base Year}} \right) \times 100
\]

3. **Substitute the values into the formula:**
\[
\text{Simple Price Index} = \left( \frac{350}{400} \right) \times 100
\]

4. **Calculate the fraction:**
\[
\frac{350}{400} = 0.875
\]

5. **Multiply by 100:**
\[
0.875 \times 100 = 87.5
\]

6. **Result:**
The simple price index for 2006 using 2005 as the base year is **87.5**.

---

### Question 2:
**Calculate the simple quantity index for 2005 using 2004 as the base year.**

1. **Identify the quantities:**
- Quantity in 2004 = 12,000 bags
- Quantity in 2005 = 14,000 bags

2. **Use the formula for the simple quantity index (SQI):**
\[
\text{Simple Quantity Index} = \left( \frac{\text{Quantity in Current Year}}{\text{Quantity in Base Year}} \right) \times 100
\]

3. **Substitute the values into the formula:**
\[
\text{Simple Quantity Index} = \left( \frac{14000}{12000} \right) \times 100
\]

4. **Calculate the fraction:**
\[
\frac{14000}{12000} = \frac{14}{12} = 1.1667 \quad (\text{approximately})
\]

5. **Multiply by 100:**
\[
1.1667 \times 100 \approx 116.67
\]

6. **Result:**
The simple quantity index for 2005 using 2004 as the base year is approximately **116.67**.

---

In summary, the answers are:
1. Simple Price Index for 2006 = **87.5**
2. Simple Quantity Index for 2005 = **116.67**