CA Foundation · Quantitative Aptitude · Index Numbers
Given Σp0q0 = 200, Σp1q0 = 260, Σp0q1 = 250 and Σp1q1 = 300, which statement is correct?
Laspeyres is 130 and Paasche is 120. Laspeyres divides Σp1q0 (260) by Σp0q0 (200), while Paasche divides Σp1q1 (300) by Σp0q1 (250). Each is then multiplied by 100.
- ALaspeyres index is 120 and Paasche index is 130
- BLaspeyres index is 130 and Paasche index is 120Correct
- CLaspeyres index is 130 and Paasche index is 124
- DBoth indices are equal to 125
Explanation
Laspeyres = 260/200 × 100 = 130. Paasche = 300/250 × 100 = 120. The first option swaps the two indices, a common mistake of mixing the formulae.
Did you get it right without looking?
One question tells you little. A timed set on Index Numbers shows your real accuracy, how long you take and where you lose marks.
More Index Numbers questions
- A shop sells two items. Base year (p0, q0): Tea ₹200, 10 units; Coffee ₹300, 5 units. Current year (p1, q1): Tea ₹240, 8 units; Coffee ₹360,…
- Which of the following is the main purpose of deflating a series of money values (such as nominal sales) using a price index?
- In the simple aggregate method of constructing a price index number, the index for the current year is obtained as:
- The factor reversal test requires that the product of a price index and the corresponding quantity index, with the roles of price and quanti…
- In the construction of a Cost of Living Index (Consumer Price Index) by the aggregate expenditure method, which of the following expresses t…
- The Consumer Price Index (base 2012 = 100) for a city was 250 in 2024. A pensioner received ₹18,000 per month in 2012. What monthly pension …