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State with reasons whether you agree or disagree with the following statement.
Price under perfect competition is decided by the interaction between demand and supply.
Concept: Price Determination Under Perfect Competition
Assertion (A): In perfect competition, price is determined by the forces of demand and supply.
Reasoning (R): The number of buyers and sellers is so large that one person can not influences prices.
Concept: Classification of Market > Based on Competition >> Perfect Competition
Statements that are incorrect in relation to index numbers:
- An index number is a geographical tool.
- Index numbers measure changes in air pressure.
- Index numbers measure relative changes in an economic variable.
- Index numbers are specialized averages.
Concept: Index Numbers
Statements related to limitations of index numbers.
- Index numbers are not completely reliable.
- There may be a bias in the data collected.
- Every formula has some kind of defect.
- Index numbers ignore changes in the qualities of products.
Concept: Limitations of Index Numbers
Statements that highlight the significance of index numbers.
- Index numbers are useful for making future predictions.
- Index numbers help in the measurement of inflation.
- Index numbers help to frame suitable policies.
- Index numbers can be misused.
Concept: Significance of Index Numbers
Laaspeyre's index : _________ :: Paasche's index : Current year quantities
Concept: Construction of Index Numbers
Calculate the price index number from the given data:
| Commodity | A | B | C | D |
| Price in 2005 (₹) | 6 | 16 | 24 | 4 |
| Price in 2010 (₹) | 8 | 18 | 28 | 6 |
Concept: Construction of Index Numbers
State with reason whether you agree or disagree with the following statement:
Index numbers measure changes in the price level only.
Concept: Index Numbers
State with reasons whether you agree or disagree with the following statement:
Index numbers can be constructed without the base year.
Concept: Index Numbers
Statements related to weighted index number:
- Suitable weights are assigned to various commodities.
- It gives relative importance to the commodity in the group.
- In most cases, quantities are used as weights.
- Laaspeyre’s Price index and Paasche’s Price Index are methods of constructing weighted index number.
Concept: Construction of Index Numbers
Find the odd word
Types of index numbers -
Concept: Index Numbers
Assertion (A): Generally, arithmetic mean is used in the construction of index numbers.
Reasoning (R): Arithmetic mean is simple to compute compared to other averages.
Concept: Construction of Index Numbers
Identify & explain the concept from the given illustration.
Bombay Stock Exchange has developed “Sensex” as a stock market index for reflecting the share prices of listed companies.
Concept: Index Numbers
Construct Quantity index number from the given data:
| Commodity | A | B | C | D | E |
| Base year quantities | 170 | 150 | 100 | 195 | 205 |
| Current year quantities | 90 | 70 | 75 | 150 | 95 |
Concept: Index Numbers
State with reason whether you agree or disagree with the following statement:
Any year can be selected as the base year
Concept: Construction of Index Numbers
Study the following table, figure, passage and answer the question given below it.
| Commodities | Price in 2015 in Rs (base year) P0 |
Price in 2019 in Rs. (current year) P1 |
| L | 20 | 30 |
| M | 60 | 80 |
| N | 100 | 130 |
| O | 40 | 60 |
| Total | ∑P0 = ? | ∑P1 = ? |
- Complete the above table (1m)
- Construct Price Index number from the above data (3m)
Concept: Construction of Index Numbers
Assertion and reasoning question:
- Assertion (A): The index number considers all factors.
- Reasoning (R): The index number is based on samples.
Concept: Index Numbers
State with reasons whether you agree or disagree with the following statement:
Index number measures changes in the price level only.
Concept: Index Numbers
Choose the correct pair:
| Group A | Group B |
| A. Price Index | (a) `(sump_1q_1)/(sump_0q_0) xx 100` |
| B. Value Index | (b) `(sumq_1)/(sumq_0) xx 100` |
| C. Quantity Index | (c) `(sump_1q_1)/(sump_0q_1) xx 100` |
| D. Paasche's Index | (d) `(sump_1)/(sump_0) xx 100` |
Concept: Types of Index Numbers
