Index NumbersMCQMTP Dec 23 Series IIQuestion 3862 of 197
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Fisher's ideal formula for calculating index number satisfies the ________

Select Your Answer (Keyboard: A, B, C, D)
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Correct Answer

✅ Option c — Both (a) and (b)

All Options:

  • AUnit Test
  • BFactor Reversal Test
  • CBoth (a) and (b)
  • DNone of these

Detailed Solution & Explanation

Fisher's Index Number is called the **Ideal Index Number** because it satisfies both the **Time Reversal Test** (P01×P10=1\displaystyle P_{01} ×\displaystyle \times P_{10} = 1) and the **Factor Reversal Test** (P01×Q01=V01\displaystyle P_{01} ×\displaystyle \times Q_{01} = V_{01}), in addition to the Unit Test. Hence, **Option C** is the correct answer.

About This Chapter: Index Numbers

Paper

Paper 3: Quantitative Aptitude

Weightage

4-6 Marks

Key Topics

Construction of Index Numbers, Time Series

This chapter covers Construction of Index Numbers, Time Series and is part of Paper 3: Quantitative Aptitude in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 4-6 Marks weightage. Focus on understanding core concepts rather than memorizing.

Key Concepts to Understand

Index Number

A statistical device for measuring changes in the magnitude of a group of related variables (like prices or production) over time.

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More Questions from Index Numbers

In price index, when a new commodity is required to be added, which of the following index is used?

Shifted Price Index = Original Price IndexPrice Index of the year on which it has to be shifted×100\displaystyle Original Price IndexPrice Index of the year on which it has to be shifted\displaystyle \frac{\text{Original Price Index}}{\text{Price Index of the year on which it has to be shifted}} ×\displaystyle \times 100

If Laspeyres's Index Number is 250 and Paasche's Index Number is 160, then Fisher's Index number is

If ∑P0q0=240\displaystyle ∑\displaystyle \sum P_0q_0 = 240, ∑P1q0=480\displaystyle ∑\displaystyle \sum P_1q_0 = 480, ∑P0q1=600\displaystyle ∑\displaystyle \sum P_0q_1 = 600 and ∑P1q1=192\displaystyle ∑\displaystyle \sum P_1q_1 = 192, then Laspeyres's Index Number is

If ΣPnqn=249\displaystyle Σ\displaystyle \Sigma P_n q_n = 249, ΣP0q0=150\displaystyle Σ\displaystyle \Sigma P_0 q_0 = 150, ΣPnq0=145\displaystyle Σ\displaystyle \Sigma P_n q_0 = 145 and Paasche's Index Number = 150, then Fisher's Ideal Price Index Number is

From the following data, find out an Index number for 2022 taking 2021 as base (using simple aggregative method): A (80, 120), B (220, 200), C (300, 400).

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