Index NumbersPYQ Jan 26Question 4599 of 197

Which index number method uses current year quantities as weights?

AFisher's Ideal Price Index

BMarshall Edge Worth Index Number

CLaspeyres' Index

DPaasche's index

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Correct Answer

✅ Option d — Paasche's index

Let us review the weighting systems for different price index numbers: - **Laspeyres' Price Index**: Uses base year quantities (

\displaystyle q_0

) as weights:

P_L = \frac{\sum p_n q_0}{\sum p_0 q_0} \times 100

- **Paasche's Price Index**: Uses current year quantities (

\displaystyle q_n

) as weights:

P_P = \frac{\sum p_n q_n}{\sum p_0 q_n} \times 100

- **Marshall-Edgeworth Index**: Uses the average of base and current year quantities:

P_{ME} = \frac{\sum p_n (q_0 + q_n)}{\sum p_0 (q_0 + q_n)} \times 100

Thus, Paasche's index is the method that uses current year quantities as weights. Hence, **Option D** is the correct answer.

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.

Exam Strategy Tip

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

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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