In the construction of Index Numbers, Geometric Mean is considered better than Arithmetic Mean because: MCQ with Answer and Explanation

Question Report Error

In the construction of Index Numbers, Geometric Mean is considered better than Arithmetic Mean because:

A. It gives equal weight to equal percentage changes

B. It is easier to calculate

C. It ignores zero values

D. It fails the time reversal test

Answer: Option A

Solution (By JKExamLibrary)

GM balances out massive price swings better than AM because it treats a doubling (200%) and a halving (50%) equally.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1 Report Error

If the mean of 10 numbers is 15, and one number is removed making the new mean 14, the removed number is:

A. 20

B. 24

C. 14

D. 15

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Correct Answer: Option B

Explanation:
Sum initially 150, after removal sum=9×14=126, removed = 150-126=24.

This question belongs to: Accountancy and Statistics Statistics

Question #2 Report Error

Assertion (A): For independent events A and B, P(A|B) = P(A). Reason (R): Independence implies that knowledge of B does not change the probability of A.

A. A is false but R is true

B. Both A and R are true, and R is the correct explanation of A

C. Both A and R are true, but R is not the correct explanation of A

D. A is true but R is false

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Correct Answer: Option B

Explanation:
By definition, if A and B are independent, the conditional probability P(A|B) equals the unconditional probability P(A), as the occurrence of B provides no information about A.

This question belongs to: Accountancy and Statistics Statistics