The Marshall-Edgeworth price index uses which quantities as weights?
Correct answer: C. The average of base and current quantities
- A. Only base-period quantities
- B. Only current-period quantities
- C. The average of base and current quantities
- D. The difference between the two quantities
Explanation
The Marshall-Edgeworth index weights prices by the sum or average of base-period and current-period quantities. Using only base quantities gives the Laspeyres approach, while only current quantities gives Paasche's approach.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
Practise Index Numbers
30 free Index Numbers MCQs from Quantitative Methods, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Quantitative Methods questions like this
Quantitative Methods is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Index Numbers questions
What is the main purpose of deflating a monetary series by a price index?
If the general price index rises while the amount of money remains unchanged, the purchasing power of money will generally:
In a family-budget method of a consumer price index, commodity weights usually represent:
What does the time-reversal test require of a satisfactory price index?
In the construction of an index number, the value assigned to the base period is usually:
Fisher's price index is obtained by taking the: