CA Foundation · Quantitative Aptitude · Index Numbers
For a basket of goods, Σp0q0 = 200, Σp1q0 = 300, Σp0q1 = 240 and Σp1q1 = 400. Fisher's ideal price index is closest to which value?
Fisher's index is the geometric mean of the Laspeyres index (150) and Paasche index (166.67). The product is 25,000, whose square root is about 158.1. Using the arithmetic mean would give 158.3, which is not Fisher's index.
- A150.0
- B166.7
- C158.1Correct
- D160.0
Explanation
Laspeyres = 300/200 × 100 = 150. Paasche = 400/240 × 100 = 166.67. Fisher = √(150 × 166.67) = √25000 = 158.11. The arithmetic mean of 150 and 166.67 is 158.33, which is wrong because Fisher uses the geometric mean.
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