If the Laspeyres Price Index for a Basket of Goods

question 11

Multiple Choice

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.

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Definitions:

Differential Costs

The difference in cost between two alternative decisions, or a change in expenses that would occur due to a particular choice.

Differential Analysis

The area of accounting concerned with the effect of alternative courses of action on revenues and costs. Also called incremental analysis.

Unprofitable Segment

A part of an organization that consistently fails to contribute a positive net income or adds a financial loss to the company's overall performance.

Opportunity Cost

The revenue that is foregone from an alternative use of an asset, such as cash.