CA Foundation · Quantitative Aptitude · Index Numbers
A small trader buys three items. Base-year price (p0), base-year quantity (q0), current price (p1) and current quantity (q1) are: Item A: p0=10, q0=5, p1=12, q1=4; Item B: p0=20, q0=5, p1=24, q1=6; Item C: p0=5, q0=10, p1=7, q1=8. What is Laspeyres' price index?
Laspeyres' price index is 125. It uses base-year quantities as weights: the current cost of the base basket is ₹250 and its base cost is ₹200, so 250/200 × 100 equals 125. Using current quantities would give Paasche's 124 instead.
- A125Correct
- B124
- C122.9
- D126.7
Explanation
Laspeyres = Σp1q0/Σp0q0 × 100. Σp1q0 = 60+120+70 = 250 and Σp0q0 = 50+100+50 = 200, giving 125. Using current quantities gives Σp1q1/Σp0q1 = 248/200 = 124, which is Paasche's index and not the one asked.
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