The 'bias' in Laspeyres and Paasche price indices is that: MCQ with Answer and Explanation

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The 'bias' in Laspeyres and Paasche price indices is that:

A. Laspeyres tends to overstate price increase, Paasche understates

B. Both understate

C. Both overstate

D. Laspeyres understates, Paasche overstates

Answer: Option A

Solution (By JKExamLibrary)

Laspeyres uses base period basket, ignoring substitution, so it overstates; Paasche uses current basket, often understating.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1 Report Error

Which of the following is a demographic characteristic?

A. Income

B. Education

C. Occupation

D. Age

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Correct Answer: Option D

Explanation:
Age, sex, marital status are core demographic characteristics.

This question belongs to: Accountancy and Statistics Statistics

Question #2 Report Error

In a Poisson distribution, mean = variance. If the mean is 4, the probability of exactly 2 occurrences is:

A. e^{-4} 4^2 / 2! ≈ 0.1465

B. 0.2

C. 0.3

D. 0.1

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Correct Answer: Option A

Explanation:
P(X=2) = e^{-4} × 16 / 2 = 8 e^{-4} ≈ 8×0.0183=0.1465.

This question belongs to: Accountancy and Statistics Statistics

Question #3 Report Error

Infant Mortality Rate (IMR) of 30 per 1,000 live births means:

A. 30 out of every 1,000 newborns die before their first birthday

B. Life expectancy is 30 years

C. 3% of infants die before age 1

D. 30 mothers die per 1,000 births

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Correct Answer: Option A

Explanation:
IMR = (Infant deaths / Live births) × 1,000. An IMR of 30 indicates 30 infant deaths per 1,000 live births, a key indicator of child health and healthcare system performance.

This question belongs to: Accountancy and Statistics Statistics

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