The Paasche index is likely to understate price rise because: MCQ with Answer and Explanation

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The Paasche index is likely to understate price rise because:

A. It uses geometric mean

B. It is unweighted

C. It uses base year quantities

D. It uses current year quantities, reflecting substitution

Answer: Option D

Solution (By JKSSB Mock Tests)

Substitution away from goods whose prices rose relatively reduces their weight, leading to underestimation.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1

A median can be determined graphically using:

A. Ogive (Cumulative Frequency Curve)

B. Scatter diagram

C. Histogram

D. Pie chart

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Correct Answer: Option A

Explanation:
The median is found graphically by plotting the 'less than' and 'more than' ogives; their intersection point corresponds to the median.

This question belongs to: Accountancy and Statistics Statistics

Question #2

In a class, 60% students pass in English and 70% in Mathematics. 20% fail in both. The percentage that pass in at least one subject is:

A. 90%

B. 80%

C. 60%

D. 50%

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Correct Answer: Option B

Explanation:
Pass in at least one = 100% - fail in both = 100% - 20% = 80%.

This question belongs to: Accountancy and Statistics Statistics

Question #3

Which measure of central tendency is the most stable from sample to sample?

A. Mode

B. None

C. Mean

D. Median

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Correct Answer: Option C

Explanation:
The arithmetic mean is based on all observations and has the smallest sampling variance among unbiased estimators of the population mean.

This question belongs to: Accountancy and Statistics Statistics

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