difference between laspeyre's and paasche method
Answers
Answer:
A Laspeyres quantity index values the quantities at the fixed prices of the earlier period, while the Paasche quantity index uses the prices of the later period. The ratio of the values of the expenditures in two periods (V) reflects the combined effects of both price and quantity changes.
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Answer:
A Laspeyres quantity index values the quantities at the fixed prices of the earlier period, while the Paasche quantity index uses the prices of the later period. The ratio of the values of the expenditures in two periods (V) reflects the combined effects of both price and quantity changes.
Paasche method
Price Index is defined as a methodology to calculate Inflation by measuring the Price change in a Commodity as compared to the base year. The Index generally uses a base year of 100 to analyze the Index. An index greater than 100 signifies the Inflation impact and an Index less than 100 implies Deflation.
laspeyre's method
Laspeyres Index is a methodology to calculate the consumer price index. read more by measuring the change in the price of the basket of goods to the base year. It was invented by Etienne Laspeyres, an economist from Germany to analyze the changes in the prices as compared to the base year period