Question

2. Assertion (A): In Simple Index number, every commodity is given equal importance
Reasoning (R) : Simple index number includes price index, Quantity index.
a. (A) is TRUE but (R) is FALSE
b. (A) is FALSE but (R) is TRUE
C. (A) and (R) both are TRUE and (R) is the
correct explanation of (A)
d. (A) and (R) both are TRUE and (R) is not the correct explanation of (A) Accortar​

Answer 1

Answer:

The correct option for this question is C. (A) and (R) both are TRUE and (R) is the correct explanation of (A).

Explanation:

Simplex index numbers are created by allocating equal weight to each commodity while creating an index number. Weighted index numbers are created by assigning appropriate weights to numerous commodities while creating an index number. Weighted Index Numbers are index numbers where various series components are given weightage based on their respective relevance. It is the weighted average of many goods' prices. For the purpose of calculating a simple index number, weights are not necessary. An index number is used to track changes in the overall price level through time and space, among other variables. It is simple or unweighted, as the name would suggest.

Thus, the ratio of two values reflecting the same variable, measured in two separate contexts or across two different time periods, is known as a simple index number.