The correct answer is: A. Arithmetic mean of Laspeyre’s and Paasche’s index
Laspeyre’s index is a price index that measures the average change in prices over time for a fixed basket of goods and services. It is calculated by taking the ratio of the current period prices to the base period prices, and then multiplying that ratio by 100.
Paasche’s index is a price index that measures the average change in prices over time for a basket of goods and services that is updated to reflect current consumption patterns. It is calculated by taking the ratio of the current period prices to the base period prices, and then multiplying that ratio by the current period quantities.
The arithmetic mean of Laspeyre’s and Paasche’s indices is a weighted average of the two indices, where the weights are the base period quantities. This index is often used as a compromise between Laspeyre’s and Paasche’s indices, as it takes into account both the current period prices and the base period quantities.
Here is a brief explanation of each option:
- Option A: The arithmetic mean of Laspeyre’s and Paasche’s index is a weighted average of the two indices, where the weights are the base period quantities. This index is often used as a compromise between Laspeyre’s and Paasche’s indices, as it takes into account both the current period prices and the base period quantities.
- Option B: The median of Laspeyres and Paaschis index is not a commonly used index. It would be calculated by finding the middle value in a list of all the possible values of the index.
- Option C: The geometric mean of Laspeyre’s and Paasche’s index is not a commonly used index. It would be calculated by taking the product of all the possible values of the index and then taking the square root of that product.
- Option D: None of these is the correct answer.