Fishers price index number equal is :a)G.M. of Kellys price index numb...
Answer :
This index number corresponds to the ratio of the sum of the prices of the actual period n and the sum of prices of the reference period 0. The fisher price index is a consumer price index and is equal to the geometric mean of the Laspeyres index and Paasche's Index. So, we have Fisher ′
s Ideal Index = √L.
I � P.
View all questions of this test
Fishers price index number equal is :a)G.M. of Kellys price index numb...
Explanation:
The Fisher's Price Index is a measure of the average change in prices of a basket of goods and services over time. It is calculated as the geometric mean of two other price indices: Laspeyres Price Index and Paasche Price Index.
Let us understand how Fisher's Price Index is calculated using Laspeyres and Paasche Price Indices.
- Laspeyres Price Index: It is a formula used to measure the change in the price of a fixed basket of goods and services over time. The formula used to calculate the Laspeyres Price Index is:
LP = (ΣP₀Q₁ / ΣP₀Q₀) x 100
where,
LP = Laspeyres Price Index
P₀ = Base period prices
Q₀ = Base period quantities
Q₁ = Current period quantities
- Paasche Price Index: It is a formula used to measure the change in the price of a current basket of goods and services over time. The formula used to calculate the Paasche Price Index is:
PP = (ΣP₁Q₁ / ΣP₁Q₀) x 100
where,
PP = Paasche Price Index
P₁ = Current period prices
Q₀ = Base period quantities
Q₁ = Current period quantities
- Fisher's Price Index: It is the geometric mean of Laspeyres and Paasche Price Indices. The formula used to calculate the Fisher's Price Index is:
FP = √(LP x PP)
where,
FP = Fisher's Price Index
LP = Laspeyres Price Index
PP = Paasche Price Index
Now, let us check the options given in the question and find out which one is correct.
a) G.M. of Kellys price index number and Paasches price index number.
- Kelly's Price Index is not used to calculate Fisher's Price Index. Therefore, option a is incorrect.
b) G.M. of Laspeyres and Paasches Price index number.
- Fisher's Price Index is the geometric mean of Laspeyres and Paasche Price Indices. Therefore, option b is correct.
c) G.M. of Bowley's Price Index number and Paasches Price Index number.
- Bowley's Price Index is not used to calculate Fisher's Price Index. Therefore, option c is incorrect.
d) None of these.
- Option b is correct. Therefore, option d is incorrect.
Hence, the correct answer is option b) G.M. of Laspeyres and Paasches Price Index number.
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.