PRC-2 · Chapter 9 · Question 55 of 60
When formulating a Laspeyres *Quantity* Index (rather than a standard price index), what historical data is utilized as the mathematical weighting factor?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Base year prices (p0)
Explanation
Because it is a Laspeyres index, it must rely on historical, base-period data for weighting. To track changing physical quantities, a Laspeyres Quantity index weights the volumes using fixed base year prices (p0).
More Indices MCQs
- Q57What is an inherent statistical flaw of utilizing the 'Simple Aggregate Method' to construct a price index?
- Q58What is a 'Value Index' designed to mathematically measure?
- Q59When maintaining a long-term index series, what is the statistical process known as 'base shifting'?
- Q60What is the primary economic and statistical purpose of calculating the Consumer Price Index (CPI)?
- Q1Which of the following best describes the fundamental purpose of constructing economic index numbers?