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The ratio of price of single commodity in a given period to its price in another period is called the
- a)Base period
- b)Price ratio
- c)Relative price
- d)None
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
The ratio of price of single commodity in a given period to its price ...
Option (a) base period is right answer.
Explanation:-
Base period or reference period refers to the period of time used as the basis for an index number, for comparison with other periods
Most Upvoted Answer
The ratio of price of single commodity in a given period to its price ...
Explanation:
- The ratio of the price of a single commodity in a given period to its price in another period is called the base period.
- It is the period against which the prices of other periods are compared to determine price changes or inflation.
- The base period is usually chosen as a representative year with stable prices, and its price index is given a value of 100.
- The prices of other periods are then expressed as a percentage of the base period index.
- For example, if the price of a commodity was Rs. 50 in the base period, and in another period, it was Rs. 75, the price ratio would be 1.5.
- This means that the price of the commodity in the other period is 50% higher than its price in the base period.
- The base period is important as it enables us to evaluate the price changes in a particular commodity over time and to determine the rate of inflation or deflation.
- It also allows us to compare the prices of different commodities in different periods and to measure their relative changes.
- Thus, the base period is a crucial reference point in any analysis of price changes, inflation, or deflation.
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The ratio of price of single commodity in a given period to its price in another period is called thea)Base periodb)Price ratioc)Relative priced)NoneCorrect answer is option 'A'. Can you explain this answer?
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