Test Index

Index Numbers and Time series

Question : 21 of 81

Marks: +1, -0

Laspeyre's index formula uses the weights of the

Solution:

Concept:

Laspeyre's index is a price index that uses base year quantities as weights.

Explanation:

The Laspeyre's index formula is given by

P_{01} = \frac{\sum p_1 q_0}{\sum p_0 q_0} \times 100

, where

q_0

represents quantities of the base year. Thus, the weights are from the base year.

Answer:

Option A: base year.

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