In a family-budget method of a consumer price index, commodity weights usually represent:
Correct answer: A. Expenditure shares of families
- A. Expenditure shares of families
- B. Physical quantities produced
- C. Profits earned by retailers
- D. Tax rates on commodities
Explanation
The family-budget method assigns weights according to the relative expenditure of households on different groups of goods and services. These weights reflect their importance in the cost of living.
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About Index Numbers
Index numbers measure relative changes in prices, quantities or values over time using a base period. Work includes simple and weighted price indices, aggregate methods, consumer price calculations, percentage change and purchasing power, with attention to choosing a base year and interpreting an index rather than treating it as an absolute amount.
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