CA Foundation P3 · Chapter 18 · Question 3 of 9
Using the data below, Paasche's price index is (to two decimals): Item A: p₀ = 10, q₀ = 5, p₁ = 12, q₁ = 6 Item B: p₀ = 8, q₀ = 10, p₁ = 10, q₁ = 8 Item C: p₀ = 5, q₀ = 8, p₁ = 6, q₁ = 10
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 121.84
Explanation
Paasche uses current-year quantities: Σp₁q₁ = 72 + 80 + 60 = 212 and Σp₀q₁ = 60 + 64 + 50 = 174. Index = (212/174) x 100 = 121.84. 122.35 is Laspeyres', and 124.71 wrongly divides Σp₁q₁ by Σp₀q₀ (212/170).
More Index Numbers MCQs
- Q5Which index number satisfies both the time reversal test and the factor reversal test?
- Q6The link relatives of prices for three successive years (each on the previous year as 100) are 110, 105 and 120. Taking the year before…
- Q7On an old base, the index numbers for years X and Y are 150 and 180. If the base is shifted to year X, the new index for year Y is:
- Q8A worker's money wage is ₹30,000 per month and the consumer price index (base = 100) is 150. His real wage in base-year prices is:
- Q9The price relatives of three items are 120, 150 and 110, with weights 5, 2 and 3 respectively. The weighted index of price relatives is: