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With regard to Laspeyre and Paasche price index numbers, it is maintained that If the Prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively. Then the above statements satisfy.
  • a)
    Laspeyre Price index ≠ Paasche Price Index.
  • b)
    Laspeyre Price Index = Paasche Price Index.
  • c)
    Laspeyre Price Index may be equal Paasche Price Index.
  • d)
    None of these.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
With regard to Laspeyre and Paasche price index numbers, it is maintai...
The Laspeyres index tends to overstate inflation (in a cost of living framework), while the Paasche index tends to understate it, because the indices do not account for the fact that consumers typically react to price changes by changing the quantities that they buy.
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Most Upvoted Answer
With regard to Laspeyre and Paasche price index numbers, it is maintai...
And Paasche price index
b) Laspeyre Price index only
c) Paasche price index only
d) None of the above

Answer: a) Laspeyre Price index and Paasche price index
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With regard to Laspeyre and Paasche price index numbers, it is maintained that If the Prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively. Then the above statements satisfy.a)Laspeyre Price index ≠ Paasche Price Index.b)Laspeyre Price Index = Paasche Price Index.c)Laspeyre Price Index may be equal Paasche Price Index.d)None of these.Correct answer is option 'B'. Can you explain this answer?
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With regard to Laspeyre and Paasche price index numbers, it is maintained that If the Prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively. Then the above statements satisfy.a)Laspeyre Price index ≠ Paasche Price Index.b)Laspeyre Price Index = Paasche Price Index.c)Laspeyre Price Index may be equal Paasche Price Index.d)None of these.Correct answer is option 'B'. 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 With regard to Laspeyre and Paasche price index numbers, it is maintained that If the Prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively. Then the above statements satisfy.a)Laspeyre Price index ≠ Paasche Price Index.b)Laspeyre Price Index = Paasche Price Index.c)Laspeyre Price Index may be equal Paasche Price Index.d)None of these.Correct answer is option 'B'. 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 With regard to Laspeyre and Paasche price index numbers, it is maintained that If the Prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively. Then the above statements satisfy.a)Laspeyre Price index ≠ Paasche Price Index.b)Laspeyre Price Index = Paasche Price Index.c)Laspeyre Price Index may be equal Paasche Price Index.d)None of these.Correct answer is option 'B'. Can you explain this answer?.
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