CA Foundation · Quantitative Aptitude · Index Numbers
A shop sells two items. Base year (p0, q0): Tea ₹200, 10 units; Coffee ₹300, 5 units. Current year (p1, q1): Tea ₹240, 8 units; Coffee ₹360, 10 units. What is the Paasche price index for the current year (base = 100)?
Paasche price index uses current year quantities: Σp1q1 divided by Σp0q1, times 100. Here 5520 divided by 4600 equals 1.2, so the Paasche index is 120.
- A120Correct
- B116
- C125
- D110
Explanation
Paasche = Σp1q1/Σp0q1 × 100. Σp1q1 = 240×8 + 360×10 = 1920 + 3600 = 5520. Σp0q1 = 200×8 + 300×10 = 1600 + 3000 = 4600. Ratio = 5520/4600 = 1.2, so the index is 120. Using base quantities instead would also give 120 here, but the method must use q1.
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