Tag: business mathematics and statistics

Questions Related to business mathematics and statistics

A composite price index based on the prices of a group of items is known as the

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. Laspeyres Index

    2. Paasche Index

    3. Aggregate price index

    4. Consumer Price Index

    Show answer
    Correct Option: C
    Explanation:

    A composite price index based on the prices of a group of items is known as the Aggregate price index.

    Which of the following statement is incorrect?

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. index number is a relative measurement

    2. in fact all index numbers are weighted

    3. theoretically the best average in construction of index numbers is Geometric mean

    4. it is not possible to shift the base if it is the case of fixed base index

    Show answer
    Correct Option: D
    Explanation:

    Most index numbers are subjected to revision from time to time due to different reasons. In most cases it becomes compulsory to change the base year because numerous changes took place with the passage of time. For example change may happen due to disappearance of old items, inclusion of new ones, change in weights of commodities or changes in conditions, habits and standard of life etc.

    In fixed base method, the base period should be: 

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. For away

    2. Abnormal

    3. Unreliable

    4. Normal

    Show answer
    Correct Option: D
    Explanation:

    $\Rightarrow$  In fixed base method, the base period should be : $Normal$.

    $\Rightarrow$ The year which is selected as a base should be a normal year, or in other words, the price level in this year should neither be abnormally low nor abnormally high. If an abnormal year is chosen as the base, the price relatives of the current year calculated on its basis would give misleading conclusions. 
    $\Rightarrow$  For example, a year in which war was at its peak, say the year 1965, is chosen as a base year; thus the comparison of the price level of the subsequent years to the price of 1965 is bound to give misleading conclusions as the price level in 1965 was abnormally high.
    $\Rightarrow$  In order to remove the difficulty associated with the selection of a normal year, the average price of a few years is sometimes taken as the base price. The fixed base method is used by the government in the calculation of national index numbers.

    If all the values are not of equal importance the index number is called:

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. Simple

    2. Unweighted

    3. Weighted

    4. None

    Show answer
    Correct Option: C
    Explanation:

    If all the values are not of equal importance, the index number is called Weighted.

    A weighted aggregate price index where the weight for each item is its base period quantity is known as the

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. Paasche Index

    2. Consumer Price Index

    3. Producer Price Index

    4. Laspeyres Index

    Show answer
    Correct Option: D
    Explanation:

    A weighted aggregate price index where the weight for each item is its base period quantity is known as the Laspeyres Index.

    Index for base period is always taken as: 

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. One

    2. Zero

    3. Hundred

    4. None of these

    Show answer
    Correct Option: C
    Explanation:

    Index for base period is always taken as Hundred.

    For the given data calculate cost of living index number. is?

    Group Food Clothing Fuel and lighting House Rent Miscellenious
    I $70$ $90$ $100$ $60$ $80$
    W $5$ $3$ $2$ $4$ $6$
    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. $78$

    2. $77$

    3. $92$

    4. $58$

    Show answer
    Correct Option: B
    Explanation:

    Cost of living index number $= \dfrac{\sum I _{i}W _{i}}{\sum W _{i}}$

    $\sum I _{i}W _{i} = 1540$

    $\sum W _{i} = 20$


    $\Rightarrow$ Cost of living index number $= \dfrac{1540}{20} = 77$

    An index number is called a simple index when it is computed from: 

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. Multiple variable

    2. Bi-variable

    3. Single variable

    4. None of these

    Show answer
    Correct Option: C
    Explanation:

    An index number is called a simple index when it is computed from Single variable.

    A quantity index that is designed to measure changes in physical volume or production levels of industrial goods over time is known as the

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. physical volume index

    2. time index

    3. Index of Industrial Production and Capacity Utilization

    4. none of the above

    Show answer
    Correct Option: C
    Explanation:

    A quantity index that is designed to measure changes in physical volume or production levels of industrial goods over time is known as the Index of Industrial Production and Capacity Utilization.

    The CLI for the year 1996 and 1999 are $140$ and $200$ respectively.A person earns Rs $11200$ p.m in the year 1996.What should be his earnings in the year 1999 so as to maintain his former standard of living.

    business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

    1. Rs$14000$

    2. Rs$15600$

    3. Rs$16000$

    4. Rs$12500$

    Show answer
    Correct Option: C
    Explanation:

    CLI for the year $1996 = 140$

    CLI for the year $1999 = 200$

    Earning p.m. in $1996 = 11200$
    Earning p.m. in $1999 = x$

    $\Rightarrow$ $140:200 :: 11200:x$
    $\Rightarrow$ $x = \dfrac{200}{140}\times 11200$

    $\therefore x =$ Rs $16000$