Discussion
Which one of the following statements is CORRECT in the context of price indices?
Answer: C
The correct statement is The price index that considers the quantity of goods in the base-year as weight is known as the Laspeyres Index.
The Laspeyres index weights prices by base-year quantities:
\[ P_{L} = \frac{\sum p_{1}q_{0}}{\sum p_{0}q_{0}} \times 100 \]
The Paasche index instead uses current-year quantities, \(\sum p_{1}q_{1} / \sum p_{0}q_{1}\), so the statement attributing base-year weights to Paasche is wrong. The first two statements swap the names: an index of raw-material and semi-finished goods prices is a producer (wholesale) price index, while an index of consumer goods prices is the Consumer Price Index.
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