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Index Numbers

Question
CBSEENST11024671
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What is the purpose of constructing an index number of (a) Prices and (b) Quantities? 

Or

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

Solution

The purpose of constructing an index number of prices is to measure the relative changes in the price of a group of commodities and the purpose of constructing index number of quantities is to measure the relative changes in the quantities of different commodities consumed or produced to obtain “quantity index”

Some More Questions From Index Numbers Chapter

In most of the weighted index numbers the weight pertains to:

 

The impact of change in the price of a commodity with little weight in the index will be:

A consumer price index measures changes in:

 

The item having the highest weight in consumer price index for industrial workers is:

 

In general, inflation is calculated by using:

 

 The item having the highest weight in consumer’s price index for industrial workers is:

consumer price index measures changes in:

The wholesale price index.

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

 

Why do we need an index number?

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