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If Fisher's index 150 and = Paasche's Index 144, = Laspeyre's index is?
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If Fisher's index 150 and = Paasche's Index 144, = Laspeyre's index is...
Calculation of Laspeyre's Index

  • Laspeyre's Index = (Total cost of current period / Total cost of base period) x 100

  • Given that Fisher's index = 150 and Paasche's Index = 144

  • We can use the formula to calculate the base period cost and current period cost for Laspeyre's index.

  • Let the base period cost be X and the current period cost be Y.

  • Using the Fisher's index formula, we can write:

  • 150 = (Y/X) x 100

  • X = Y/1.5

  • Using the Paasche's index formula, we can write:

  • 144 = (Total cost of current period / Total cost of current period) x 100

  • Total cost of current period = 1.44 x Total cost of base period

  • Substituting X = Y/1.5 in the above equation, we get:

  • Total cost of current period = 1.44 x (Y/1.5) = 1.152Y

  • Now, substituting the values in the Laspeyre's index formula, we get:

  • Laspeyre's Index = (1.152Y / Y) x 100 = 115.2


Explanation

  • Fisher's index is a weighted average of the Laspeyre's and Paasche's indices.

  • It is given that Fisher's index is 150 and Paasche's index is 144.

  • Using these two indices, we can calculate the base period cost and current period cost for the Laspeyre's index using the formulas.

  • Substituting these values in the Laspeyre's index formula, we can calculate the Laspeyre's index.

  • Laspeyre's index measures the change in cost of a fixed basket of goods and services using the prices of the base period.

  • It is useful in measuring the impact of inflation on consumers as it takes into account the quantities purchased in the base period.

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If Fisher's index 150 and = Paasche's Index 144, = Laspeyre's index is...
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If Fisher's index 150 and = Paasche's Index 144, = Laspeyre's index is?
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