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Tamil Nadu Board of Secondary EducationHSC Commerce Class 12

Define Laspeyre’s price index number

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Question

Define Laspeyre’s price index number

Sum
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Solution

Laspeyre’s Price index number

`"P"_01^"L" = (sum"p"_1"q"_0)/(sum"p"_0"q"_0) xx 100`

Where P1 = Current year price

p0 = Base year price

q0 = Base year quantity

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Chapter 9: Applied Statistics - Exercise 9.2 [Page 219]

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Samacheer Kalvi Business Mathematics and Statistics [English] Class 12 TN Board
Chapter 9 Applied Statistics
Exercise 9.2 | Q 4 | Page 219

RELATED QUESTIONS

Statements that are incorrect in relation to index numbers:

  1. An index number is a geographical tool.
  2. Index numbers measure changes in air pressure.
  3. Index numbers measure relative changes in an economic variable.
  4. Index numbers are specialized averages.

Complete the Correlation:

__________ : Single variable :: Composite index : Group of variables


Index numbers that measure changes in the level of output or physical volume of production in the economy −


Find the odd word

Types of index numbers -


Assertion (A): Index numbers are statistical devices.

Reasoning (R): Index numbers measure only changes in the price level over a period of time.


State the uses of Index Number


Using the following data, construct Fisher’s Ideal index and show how it satisfies Factor Reversal Test and Time Reversal Test?

Commodity Price in Rupees per unit Number of units
Basic year Current year Base year Current year
A 6 10 50 56
B 2 2 100 120
C 4 6 60 60
D 10 12 50 24
E 8 12 40 36

Calculate the cost of living index by aggregate expenditure method:

Commodity Weight
2010
Price (Rs.)
2010 2015
P 80 22 25
Q 30 30 45
R 25 42 50
S 40 25 35
T 50 36 52

Explain the meaning of index number.


Read the given passage and answer the questions:

Index Number is a technique of measuring changes in a variable or group of related variables with reference to time, geographical location and other characteristics.

Index Number is very useful for economists, farmers, traders, government, educationalists and trade union leaders for planning and implementing the plans according to their sector.

The scope of index number is not limited to only one subject but it extends to many subjects such as Economics, Educational science, Psychology, History, Sociology, Geography etc.

While framing index number its objective must be determined. To attain the objective the information is collected in various ways and this information is used for comparing two different time periods. For this purpose, the base year’s index is assumed as 100 and accordingly the value of the current year is calculated.

Laspeyre, Paasche and Fisher have suggested different methods for constructing index numbers.

  1. Explain the meaning of Index Number.
  2. To whom the Index Number is useful?
  3. Express your opinion about the given passage.

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