A department store sells stereo systems, television sets and radios. The percentage distribution of the total sales volume (in Rs) is estimated as 30% stereos, 50% televisions and 20% radios. The price of one stereo, one television and one radio in 2009 was Rs. 20000, Rs. 15000 and Rs 500 respectively, while their respective price in 2012 were Rs 25000, Rs 20000 and Rs 800.
A weighted price index for 2012 with base 2009 is to be computed.
(i) Which index number formula is appropriate? Why?
(ii) Compute the index.