Question

Which of these method of index number uses arithmetic average of the Laspeyres and Paasche's index.

• A. Fisher Ideal test
• B. Bowley and Dorbish method
• C. Marshall Edgeworth method
• D. Kelly method

Answer 1

The correct option is B Bowley and Dorbish method

Dorbish and Bowley have suggested simple arithmetic mean of the two indices mentioned above so s to take into account the influence of both the periods, i.e., current as well as base periods. Thus Dorbish and Browley's Method is arithmetic mean of Laspeyre's index and Passche's index. In this method, the index number is equal to the sum of prices for the year for which index number is to be found divided by the sum of actual prices for the base year. The formula for finding the index number through this method is as follows option ‘b’ is correct answer.