CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series
The price of a commodity was Rs 40 per kg in the base year and Rs 50 per kg in the current year. The price relative of the commodity for the current year, with base year = 100, is:
The price relative is 125. It is found by dividing the current price of Rs 50 by the base price of Rs 40 and multiplying by 100. This shows the commodity price is 25 percent higher than in the base year.
- A80
- B125Correct
- C110
- D150
Explanation
Price relative = (current price / base price) x 100 = (50/40) x 100 = 125. The value 80 comes from inverting the ratio (40/50 x 100), which uses the wrong base.
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