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Index Numbers
Question
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Give three points of difference between Laspeyre’s method and Paasche’s method of constructing weighted index numbers.

Answer

Differences between Laspeyre’s method and Paasche’s method:

Bases of difference: 1. Base 2. Formula Laspeyre’s method:This method uses the base period quantities as weights.

2. Following formula is used in this method

Paasche’s Method:This method uses the current period quantities as weights.

2. Following formula is used in this method

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Some More Questions From Index Numbers Chapter

D.A. paid to the workers is based on:

 

Why do we need an index number?

Why is it essential to have different CPIs for different categories of consumers?

What does a consumer price index for industrial workers measure?

What is the difference between a price index and a quantity index?

Is the change in any price reflected in price index number?

Can the CPI for urban non-manual employees represent the changes in the cost of living of the President of India?

Try to list the important items of consumption in your family.

The consumer price index for june, 2005 was 125. The food index was 120 and that of others items 135. What is the percentage of the total weight given to food?

If a salary of a person in the base year is Rs. 4000 per annum and the current year is Rs. 6000 by how much should his salary rise to maintain the same standard of living if the CPI in Rs. 4000.