CA Foundation Exam > CA Foundation Questions > If the price of all commodities in a place ha...
Start Learning for Free
If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is now
- a)100
- b)125
- c)225
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
If the price of all commodities in a place has increased 125 times in ...
According to the question, Given : P1 = P0 + 1.25 P0
P1 = 2.25 P0
In index numbers, we assume base price P0 = 100
P1 = 2.25 ( 100)
P1 = 225
Price of that place = 225
Most Upvoted Answer
If the price of all commodities in a place has increased 125 times in ...
Explanation:
An index number is a measure of the average price level of a group of commodities at a particular point in time as compared to the same group of commodities at some base period. In this question, the base period prices are given and we have to find the index number of prices for the place at present.
Let the base period price of a commodity be P and the present price of the same commodity be Q. Also, let the index number of prices for the place be x.
According to the question, the price of all commodities in the place has increased 125 times in comparison to the base period prices. Therefore,
Q = 125P
To calculate the index number, we use the formula:
x = (Total cost of commodities at current prices / Total cost of commodities at base period prices) x 100
Let there be n number of commodities in the place.
Total cost of commodities at current prices = Q1 + Q2 + ... + Qn
= 125P + 125P + ... + 125P (n times)
= 125nP
Total cost of commodities at base period prices = P1 + P2 + ... + Pn
= P + P + ... + P (n times)
= nP
Substituting these values in the formula for the index number, we get:
x = (125nP / nP) x 100
= 125 x 100
= 12,500
Therefore, the index number of prices for the place is 12,500, which is option (c).
An index number is a measure of the average price level of a group of commodities at a particular point in time as compared to the same group of commodities at some base period. In this question, the base period prices are given and we have to find the index number of prices for the place at present.
Let the base period price of a commodity be P and the present price of the same commodity be Q. Also, let the index number of prices for the place be x.
According to the question, the price of all commodities in the place has increased 125 times in comparison to the base period prices. Therefore,
Q = 125P
To calculate the index number, we use the formula:
x = (Total cost of commodities at current prices / Total cost of commodities at base period prices) x 100
Let there be n number of commodities in the place.
Total cost of commodities at current prices = Q1 + Q2 + ... + Qn
= 125P + 125P + ... + 125P (n times)
= 125nP
Total cost of commodities at base period prices = P1 + P2 + ... + Pn
= P + P + ... + P (n times)
= nP
Substituting these values in the formula for the index number, we get:
x = (125nP / nP) x 100
= 125 x 100
= 12,500
Therefore, the index number of prices for the place is 12,500, which is option (c).
Attention CA Foundation Students!
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.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?
Question Description
If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?.
If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?.
Solutions for If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice If the price of all commodities in a place has increased 125 times in comparison to the base period prices, then the index number of prices for the place is nowa)100b)125c)225d)None of the aboveCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup