If the Laspeyres price index for a basket of goods is 128 and the Paasche price index for the same basket of goods for the same time period is 119, which of the following is the value of the Fischer price index, the geometric mean of these two indices?
A)123.5
B)9
C)123.42
D)None of these choices are correct.

Question

Quizplus · Accepted Answer

The Fischer price index is the geometric mean of the Laspeyres and Paasche indices, which is equal to the square root of their product. Therefore, Fischer price index = sqrt(128*119) = 123.42. Therefore, the answer is C.

If the Laspeyres Price Index for a Basket of Goods