CA Foundation · Quantitative Aptitude · Index Numbers
For a set of goods, Σp0q0 = 400, Σp1q0 = 500 and Σp0q1 = 360. Fisher's ideal price index is 125. What is the value of Σp1q1?
Σp1q1 is 450. Laspeyres is 125, and since Fisher's index is also 125, Paasche must equal 125. Then Σp1q1 divided by 360 equals 1.25, so Σp1q1 is 450.
- A450Correct
- B400
- C480
- D420
Explanation
Laspeyres L = 500/400 × 100 = 125. Fisher = √(L×P), so 125 = √(125×P), giving P = 125. Paasche = Σp1q1/Σp0q1 × 100 = 125, so Σp1q1 = 1.25 × 360 = 450. Check: 450/360 = 1.25. Option 400 results from applying the base-year denominator 400 wrongly.
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