CA Foundation · Quantitative Aptitude · Index Numbers
For a basket of goods, Σp0q0 = 400, Σp1q0 = 520, Σp0q1 = 450 and Σp1q1 = 630. What is the Paasche price index number?
The Paasche price index is 140. It is Σp1q1 divided by Σp0q1, that is 630 divided by 450, times 100. The figure 130 is the Laspeyres index, which uses base year quantities, so it is not the answer.
- A130
- B140Correct
- C115.4
- D120
Explanation
Paasche = Σp1q1 / Σp0q1 × 100 = 630/450 × 100 = 140. The value 130 is the Laspeyres index (520/400 × 100), which uses base quantities and is therefore the wrong formula here.
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