why is fisher's index number called an ideal index number?
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Fisher's methid is called ideal method because:-
1. It takes into consideration both price and quantity of base year as well as current year.
2. It is based on geometric mean which is best method for calculating index number.
3. It is combination of laspeyre' method and paasche' method.
4. It satisfies both time reversal test and factor reversal test.
5. It is based on variable weights.
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Answer:
Fisher method is called ideal method because:-
- It takes into consideration both price and quantity of base year as well as current year.
- It is base on geometic mean which is best method for calculating index number
- It is comination of laspeyre method and paasche method.
- It satisfies both time reversal test and factor reversal test.
- it is base on veriable weights
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