Which of the following statements is TRUE?
A) Both the Laspeyres index and Paasche index over-estimate price increases
B) The Laspeyres index may be easier to calculate as it needs only base quantities
C) Weights used in the Paasche index calculation may be out-of-date
D) The Laspeyres index is not usually considered a 'pure' price index

Question

Quizplus · Accepted Answer

The Laspeyres price index uses the quantities of the base period as weights, making it easier to calculate since it does not require new quantity data for each period being measured. This contrasts with the Paasche index, which uses the quantities of the current period, necessitating the collection of new data for each period.

Which of the Following Statements Is TRUE