Question

whose formula is considered ideal for the construction of index number? (A) Paasche's formula (B) fisher's formula (C) Laspeyre's formula (D) None of these​

Answer 1

Answer:

(A) Paasche's formula

Answer 2

Answer:

(B) fisher's formula

Fisher's formula is considered ideal for the construction of index number.

Explanation:

Fisher proposed and dubbed this index formula the "ideal formula." Assuming that for individual item I prices and quantities at the base period are pi 0 and qi 0, and prices and quantities at the observation period are pi t and qi t, the following equation is known as the "Fisher formula." index was dubbed the "ideal" index by Fisher, and it is now known as Fisher's ideal index number formula

Fisher's formula is known as the ideal formula for the following reasons:

1. It is based on geometric mean, which is thought to be the best method for constructing index numbers
2. It passes both the time and factor reversal tests.
3. It considers both current year and base year prices and quantities.