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| STA304 GDB NO. 1 FALL 2021 |
STA304 GDB NO. 1 FALL 2021 || 100% RIGHT SOLUTION || APPLIED STATISTICS II BY VuTech
QUESTION NO. 1
Different between time reversal test and
factor reversal test.
Answer:
Time Reversal Test
If the time subscripts ()
and n are interchanged in a price (or quantity) index number formula wherever
they appear, then the resulting price (or quantity) formula should be the
reciprocal of the original index formula, ignoring the factor 100.
Symbolically, the test requires that
Pon = 1 / Pno Pon x Pno
= 1
Factor Reversal Test:
If the factors p’s (prices) and q’s (quantities)
occurring in a price (or quantity) index formula be interchanged (or reversed)
so that a quantity (or price) index formula is obtained, then the product of
the two index numbers should equal the value index number, i.e.
In other words, the factor reversal test requires that
(Price Index)(Quantity Index) = Value Index
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QUESTION NO. 2
Write down the steps of construction of an index
number.
Answer:
Following steps of construction of an index number.
·
Selection of commodities to be included,
their number and price quotations.
·
Selection of the base period and
calculation of price relatives.
·
Selection of average to be used.
·
Selection of appropriate weights.
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