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Laspeyre's Price Index

In most of th...

Question

In most of the weighted index numbers the weight pertains to (i) base year

(ii) current year

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Solution

(i) In general, the base period weight is preferred in calculating the weighted index number but Laspeyre's method uses the base year quantity as weight, Paasche's method uses current year quantities as weight.

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Similar questions

In most of the weighted index numbers the weight pertains to

(i) base year

(ii) current year

(iii) both base and current year

Q. Taking 1975 as the base year with an index number 100 , calculate an index number for 1985 based on weighted average of price relatives.

Commodity	A	B	C	D
weight	20	30	10	40
Price per unit in 1975	10	20	5	40
Price per unit in 1985	30	35	10	80

Q. Calculate price index number by weighted average of price relative method.

Commodity	Price Base Year (in ₹)	Price current year ( in ₹)	Quantity Base year (in Kg)
A	6.0	8.0	40
B	3.0	3.2	80
C	2.0	3.0	2

Q. Find the consumer price index number for the year 2010 using year 2000 as the base year by using method of weighted aggregates

Commodity	A	B	C	D	E
Year 2000 price (in Rs. per unit)	16	40	0.50	5.12	2.00
Year 2010 price (in Rs. per unit)	20	60	0.50	6.25	1.50
Weights	40	25	5.00	20.00	10.00

Q. LIFO inventory method was used in year I, FIFO in year II and weighted average in year III. Which accounting principle is violated?

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