Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Laspeyres Method
Laspeyres method uses the quantities consumed during the base period in computing the index number. This method is also the most commonly used method which incidentally requires quantity measures for only one period. Laspeyres index can be calculated using the following formula:
where,
Laspeyres Index
In general, Laspeyres price index calculates the changes in the aggregate value of the base year's list of goods when valued at current year prices. In other words, Laspeyres index measures the difference between the theoretical cost in a given year and the actual cost in the base year of maintaining a standard of living as in the base year.
Also, Laspeyres quantity index can be calculated by using the formula,
Q1
=
Using the same data as provided in the above table, Laspeyres quantity index is
A Laspeyres index is simpler in calculation and can be computed once the current year prices are known as the weights are base year quantities in a price index. This also enables easy comparability of one index with another. Interestingly, Laspeyres tends to overestimate the rise in prices or has an upward bias.
There is usually a decrease in the consumption of those items for which there has been a considerable price hike and the usage of base year quantities will result in assigning too much weight to prices that have increased the most and the net result is that the numerator of the Laspeyres index will be too large.
Similarly, when the prices go down, consumers tend to demand more of those items that have declined the most and hence the usage of base period quantities will result in too low weight to prices that have decreased the most and the net result is that the numerator of the Laspeyres index will again be too large.
This is a major disadvantage of the Laspeyres index. However, the Laspeyres index remains most popular for reasons of its practicability. In most countries, index numbers are constructed by using Laspeyres formula.
This is a major disadvantage of the Laspeyres index.
However, the Laspeyres index remains most popular for reasons of its practicability. In most countries, index numbers are constructed by using Laspeyres formula.
Q. What do you mean by synergy? Synergy: synergy refers to the greater combined value of merged firms than the sum of the values of individual units. It is something like one p
State the several goals for the organisation As there could be several goals for the organisation, we must try and summarise theorganisational goals in financial terms so that
what course a decrease and increase in share price
a. Calculate expected earnings per share (EPS) if the firm is perfectly hedged. EPS $
Q. Working Capital as a Percentage of Net Sales? This approach to estimate the working capital requirement is based on the fact that the working capital for any firm is directl
explain about receivable management
The Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equity 60% NNBI''''s expected net income
What are the factors of debt securities A legal agreement, known as a trust deed, is drawn between security holders and company issuing the debt securities. Every security issu
MARGINAL ANALYSIS It is difficult to develop the conditional profit table when there are a large number of scenarios and possible actions. The marginal analysis approach sides
Types of Treasury Bills Treasury bills are issued at various maturities, generally up to one year. Thus, they are useful in managing short-term liquidity. At present, the GOI (
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd