The factor reversal test requires that the product of a price index and a quantity index should equal: MCQ with Answer and Explanation

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The factor reversal test requires that the product of a price index and a quantity index should equal:

A. 100

B. The Fisher index

C. The value ratio (Σp₁q₁/Σp₀q₀)

D. 1

Answer: Option C

Solution (By JKSSB Mock Tests)

It ensures that the product of price and quantity indices equals the change in total value.

This question belongs to: Accountancy and Statistics Statistics

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Question #1

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A bag contains 3 red and 2 blue balls. Two balls are drawn at random without replacement. The probability that both are red is:

A. 3/5

B. 9/25

C. 1/2

D. 3/10

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Correct Answer: Option D

Explanation:
P(both red) = (3/5) × (2/4) = 6/20 = 3/10. Without replacement, the probability changes after the first draw, requiring multiplication of conditional probabilities.

This question belongs to: Accountancy and Statistics Statistics

Question #2

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Assertion (A): The probability of an impossible event is zero. Reason (R): The sample space of an impossible event contains all outcomes.

A. Both A and R are true but R is NOT the correct explanation of A

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

C. A is false but R is true

D. A is true but R is false

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Correct Answer: Option D

Explanation:
A is true, but R is false because the sample space (or favorable outcomes set) of an impossible event is the empty set (Φ).

This question belongs to: Accountancy and Statistics Statistics

Question #3

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Which formula uses the arithmetic mean of base and current year quantities as weights?

A. Paasche

B. Dorbish-Bowley

C. Marshall-Edgeworth

D. Laspeyres

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Correct Answer: Option C

Explanation:
Marshall-Edgeworth uses the sum (or arithmetic average) of quantities from both years: w = (q0 + q1).

This question belongs to: Accountancy and Statistics Statistics

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