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