The Reason Why Weights Are Used in an Aggregate Index

question 3

Multiple Choice

The reason why weights are used in an aggregate index is to

• A)insure that all items have an influence on the index which is relative to their respective importance
• B)insure that expensive items are considered more heavily
• C)insure that current prices will influence the index more than base prices
• D)None of these alternatives is correct.

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Definitions:

Downstream Division

A sector of a company or industry that focuses on the final stages of production and distribution to end-users, often involving refining, selling, and distribution processes.

Transfer Price

The price at which goods and services are sold between departments or subsidiaries within the same company.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including expenses like lease payments, employee wages, and insurance fees.

Market Price

The current price at which an asset or service can be bought or sold.