If the quantities of base time period are taken as weights, the weighted aggregative price index is called Laspeyres price index. This method of calculating price index is also called base year quantity weight method. The appropriateness of laspeyres price index depends upon the quantities purchased during the base year. If the base period quantities are reasonable weights to apply to all time periods then the calculation of this index is appropriate. On the other hand if relative quantities change significantly from those in the base period then the calculation of this index is inappropriate. This index can be calculated by using the formula given below.
Here,
Pn is the price of commodity in current year and Po is the price of commodity in base
Qo is the quantity of commodity in base
Problem A: Calculate price index using laspeyres formula. Take 1980 as base year.
Solution:
Problem B: Calculate price index using laspeyres formula. Take 1995 as base year.
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thank you very much for understanding it in a easy manner…
Thanks for the corporation, it is more helpful
How do we calculate larpeyres given two prices in a year as well as quantity
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This article is indeed very helpful!
thanks for the article.
i have a question:
for example we have the weight of the items in basket of goods and the price of each item, now how should we determine the price index?
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thank you sir
thank you for explaining this topic on a simplier way for me to understand
if the quantities of current year and base year are changed, then which quantity would be chosen?
Thank you so much, excellent explanation, tomorrow I got a exam
Is there any practice problems that one can do?
this has helped me alot great work ….thumbs up
Fine this is important channel of where our ideas will be exchanged through laypeyres price and quantities.
keep up !
easily understood
thank you
What is the current defination of laspyers, that is defined from 2000 till date?
What can someone consider before chosen a specific year as the base year pls?
thanks, very helpful
There is a problem,if there are 3 are given then how will it be calculated…. please respond as possible
Is it necessory to use first box sir
?
If its up to 4 i guess will it be solve still using the told year as base year for everything
Thanks it was helpful for my assignment
Thanks for the article it really helped me
Thank you. This is helpful
Thanks for supporting my understanding of the topic on this subject , it has greatly helped me do my assingment
Very Help full information.