CA Foundation · Quantitative Aptitude · Index Numbers
For a set of goods, Σp0q0 = 400, Σp1q0 = 500, Σp0q1 = 360 and Σp1q1 = 480. Fisher's ideal price index is closest to which value?
Fisher's index is the geometric mean of Laspeyres and Paasche. Laspeyres is 125 and Paasche is 133.33, so the square root of their product is about 129.1.
- A129.1Correct
- B125.0
- C133.3
- D127.5
Explanation
Laspeyres = 500/400 × 100 = 125. Paasche = 480/360 × 100 = 133.33. Fisher = √(125 × 133.33) = √16666.7 ≈ 129.1. The arithmetic mean 129.17 is close but Fisher uses the geometric mean; 125 is only Laspeyres and 133.3 only Paasche.
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