Question

Define Laspeyre’s price index number.

Answer 1

The weighted aggregate index number using base period weights is called Laspeyre’s price index number.

\(P^L_{01} = \frac {\sum p_1q_0} {\sum p_0q_0}\times100\)

Where p₁ is current year price 

p₀ is base year price 

q₀ is base year quantity

Answer 2

Laspeyres Index is a methodology to calculate the consumer price index by measuring the change in the price of the basket of goods to the base year.

Its relationship is given as:

Laspeyres Index Formula= ∑ ( Observation Price * Base Qty) / ∑ ( Base Price * Base Qty)