The Laspeyres price index has the disadvantage that the consumption pattern in the initial period might be quite different from that in the current period and,hence,does not reflect accurately the current consumption cost.

Question

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The Laspeyres price index is based on a fixed basket of goods and services that represents the consumption pattern in a base period. However, over time, the consumption pattern of households may change due to changes in income, availability of new products, and changes in tastes and preferences. Therefore, the Laspeyres price index may not accurately reflect the current consumption cost. This is known as the "base year bias" problem.

The Laspeyres Price Index Has the Disadvantage That the Consumption