why lasperes index number is not called as ideal


The Laspeyre's and Paasche's index numbers are not the ideal method because of the following reasons.
  1. These tests does not satisfy the time reversal test and factor reversal test.
  2. These methods do not consider the price and quantities of the current year.
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the formula is sigmap1q0/sigmap0q0
because it uses only base year quantities not the current year quantities
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