write down the formula of constructing index no.using laspeyers method.name widely used in index numbers??

Dear Student,
Laspeyre's Price Index Number uses base year quantities as weights. The following is the formula for calculating Index Number using Laspeyre's Method.


p1 refers to current year prices

p0 refers to base year prices

q0 refers to base year quantities

Laspeyre's Price Index is the most widely used method of estimating index number. This is because Laspeyre's approach uses base year quantities as weights which remain fixed and do not change from time to time. Since, the base remains the same, Laspeyre's approach makes comparison of indices estimated for different time periods using the same basket of goods easy.

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