CIMA BA1 · Chapter 10 · Question 2 of 10
A Laspeyres price index is calculated using:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Base period quantities as weights
Explanation
A Laspeyres index measures the change in the cost of buying the base period basket of goods, so it weights prices by base period quantities. A Paasche index weights by current period quantities.
More Index numbers MCQs
- Q4Using the same data: Item X: base price $4, base quantity 10, current price $5, current quantity 8 Item Y: base price $10, base quantity…
- Q5An index series has Year 1 = 100. The index stands at 125 in Year 4 and 150 in Year 7. If the series is rebased so that Year 4 = 100, what…
- Q6An employee's weekly wage was $400 in Year 1 and $460 in Year 3. A retail price index was 100 in Year 1 and 112 in Year 3. What is the…
- Q7The main reason for using a weighted index rather than a simple aggregate index is to:
- Q8Why is a Laspeyres price index often said to overstate the rise in the cost of living?