The formula for the Laspeyres price index is (o is the base year and n is the given year) ?
Correct answer: C. P = ∑Pnqo/∑poqo
- A. P = ∑Poqo/∑poqo
- B. P = ∑Poqo/∑pnqn
- C. P = ∑Pnqo/∑poqo
- D. P = ∑Poqn/∑poqo
Explanation
The Laspeyres index holds the base-year quantities constant while comparing current-year prices with base-year prices: ΣPnqo divided by ΣPoqo. Using current-year quantities would instead point toward a Paasche-type index.
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