Index NumbersMCQMTP June 24 Series IIIQuestion 3872 of 197
All Questions

When the product of price index and the quantity index is equal to the corresponding value index then the test that holds is

Options

AUnit Test
BTime Reversal Test
CFactor Reversal Test
DNone of these
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Correct Answer

Option cFactor Reversal Test

All Options:

  • AUnit Test
  • BTime Reversal Test
  • CFactor Reversal Test
  • DNone of these

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Detailed Solution & Explanation

The **Factor Reversal Test** holds when the product of the price index (P01\displaystyle P_{01}) and the quantity index (Q01\displaystyle Q_{01}) is equal to the corresponding value index (V01\displaystyle V_{01}): P01×Q01=V01=p1q1p0q0P_{01} \times Q_{01} = V_{01} = \frac{\sum p_1 q_1}{\sum p_0 q_0} 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.

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