Which of the Following Statements Is True About the Comparison

question 74

Multiple Choice

Which of the following statements is true about the comparison between the Laspeyres and Paasche indices?

• A) The Laspeyres index is more expensive to compute than the Paasche index.
• B) The data requirements are more stringent for the Laspeyres index than for the Paache index.
• C) Unlike the Laspeyres index,the Paasche index incorporates current expenditure patterns of consumers.
• D) Unlike the Paasche index,the Laspeyres index requires that the weights be updated each year and the index numbers be recomputed for all of the previous years.

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Definitions:

Market Model

A theoretical construct that describes the workings of a market through a set of mathematical equations or principles, aiming to predict the outcome of market forces.

Price

The price associated with purchasing a good, service, or asset.

Negligible Fraction

A very small part or amount that is considered insignificant in size or importance.

Purely Competitive Market

A market structure featuring many sellers offering identical products, leading to competition based on price rather than product differentiation.