CA Foundation · Quantitative Aptitude · Index Numbers
For two commodities, the data are: A: p0 = 10, q0 = 5, p1 = 12, q1 = 6; B: p0 = 20, q0 = 10, p1 = 25, q1 = 8. What is the Paasche price index number, correct to two decimals?
The Paasche price index is 123.64. Using current year quantities, the basket costs ₹272 at current prices and ₹220 at base prices. The ratio 272/220 multiplied by 100 gives 123.64.
- A124.00
- B123.64Correct
- C121.60
- D125.45
Explanation
Paasche = Σp1q1/Σp0q1 × 100. Σp1q1 = 12×6 + 25×8 = 72 + 200 = 272. Σp0q1 = 10×6 + 20×8 = 60 + 160 = 220. So 272/220 × 100 = 123.64. The value 124.00 is Laspeyres, which wrongly uses base quantities.
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