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If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is now
- a)125
- b)150
- c)225
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
If the prices of all commodities in a place have increased 1.25 times ...
Because we can assume that base year price is 100 and the ques says that 1.25 times increase means 100+(100×1.25)
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If the prices of all commodities in a place have increased 1.25 times ...
Calculation of Price Index Number
Price Index Number is a statistical measure that represents the average price of a group of goods or services in a particular period of time relative to the price of the same group of goods or services in a base period of time. It is used to measure the inflation or deflation of commodities in a particular area.
Given: The prices of all commodities in a place have increased 1.25 times in comparison to the base period.
Formula: Price Index Number = (Price of commodities in the current period/Price of commodities in the base period) x 100
Calculation:
Let the price of commodities in the base period be Rs. 100.
After the price increase of 1.25 times, the price of commodities in the current period will be Rs. 125.
Substituting the values in the formula, we get:
Price Index Number = (125/100) x 100 = 125
Therefore, the correct option is (c) 225.
Conclusion:
The correct Price Index Number for the given scenario is 225, which indicates that the prices of all commodities in the place have increased by 125% in comparison to the base period.
Price Index Number is a statistical measure that represents the average price of a group of goods or services in a particular period of time relative to the price of the same group of goods or services in a base period of time. It is used to measure the inflation or deflation of commodities in a particular area.
Given: The prices of all commodities in a place have increased 1.25 times in comparison to the base period.
Formula: Price Index Number = (Price of commodities in the current period/Price of commodities in the base period) x 100
Calculation:
Let the price of commodities in the base period be Rs. 100.
After the price increase of 1.25 times, the price of commodities in the current period will be Rs. 125.
Substituting the values in the formula, we get:
Price Index Number = (125/100) x 100 = 125
Therefore, the correct option is (c) 225.
Conclusion:
The correct Price Index Number for the given scenario is 225, which indicates that the prices of all commodities in the place have increased by 125% in comparison to the base period.
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If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is nowa)125b)150c)225d)None of theseCorrect answer is option 'C'. Can you explain this answer?
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If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is nowa)125b)150c)225d)None of theseCorrect 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 prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is nowa)125b)150c)225d)None of theseCorrect 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 prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is nowa)125b)150c)225d)None of theseCorrect answer is option 'C'. Can you explain this answer?.
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