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Each of the following statements is either True or False with your choice of the answer by writing F for False.
  • a)
    Current year quantities are taken as weight in Paasche’s price index number.
  • b)
    Edge worth Marshall’s index number formula satisfies Time, Reversal Test.
  • c)
    The Arithmetic mean of Laspeyre’s and Paasche’s index numbers is called Bowely’s index numbers.
  • d)
    None of these.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Each of the following statements is either True or False with your cho...
Explanation:

Paasches price index number:

This statement is False. Paasches price index number is calculated by taking the current year quantities as weights for the calculation of index number.

Edge worth Marshalls index number formula:

This statement is False. The formula for Edge worth Marshalls index number satisfies the Factor Reversal Test but not the Time Reversal Test.

Bowelys index numbers:

This statement is False. The arithmetic mean of Laspeyres and Paasches index numbers is called Fisher's index numbers and not Bowelys index numbers.

Therefore, the correct answer is option 'D' which states "None of these".

Conclusion:

CA Foundation students should be aware of the various index numbers and their formulas. They should also know the difference between Laspeyres and Paasches index numbers and their applications. Understanding the Time and Factor Reversal Test is also important.
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Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Current year quantities are taken as weight in Paasches price index number.b)Edge worth Marshalls index number formula satisfies Time, Reversal Test.c)The Arithmetic mean of Laspeyres and Paasches index numbers is called Bowelys index numbers.d)None of these.Correct answer is option 'D'. Can you explain this answer?
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