Index NumbersMCQMTP May 18Question 3896 of 197
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The index number of prices at a place in 2008\displaystyle 2008 is 355\displaystyle 355 with 2003\displaystyle 2003 as base. This means

Options

AThere has been on the average a 255%\displaystyle 255\% increase in price.
BThere has been on the average a 355%\displaystyle 355\% increase in price.
CThere has been on the average a 250%\displaystyle 250\% increase in price.
DNone of these.
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Correct Answer

Option aThere has been on the average a 255%\displaystyle 255\% increase in price.

All Options:

  • AThere has been on the average a 255%\displaystyle 255\% increase in price.
  • BThere has been on the average a 355%\displaystyle 355\% increase in price.
  • CThere has been on the average a 250%\displaystyle 250\% increase in price.
  • DNone of these.

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Detailed Solution & Explanation

An index number measures changes relative to a base period, where the base period index is always set to 100%\displaystyle 100\%. If the price index of a place in the current year is 355, it means that the price level has reached 355\% of the base year price level. The average percentage increase in prices is: Percentage Increase=Price Index100%=355%100%=255%\text{Percentage Increase} = \text{Price Index} - 100\% = 355\% - 100\% = 255\% Thus, there has been on average a 255\% increase in prices. *(Note: Although some answer keys incorrectly point to Option B due to confusing the price level with the price increase, mathematically, the increase is exactly 255\%).* Hence, **Option A** 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

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