Question 14 of 19beginner💡 UnderstandMCQ1 mark
The impact of change in the price of a commodity with little weight in the index will be
Exercise: EXERCISES | Q: 3 | (Chapter: Page 12)
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Explanation
Option (i) is correct. The provided context explains that in a weighted index, items differ in order of importance. It states that 'an equal rise in the price of an item with large weight and that of an item with low weight will have different implications for the overall change in the price index'. Since a commodity with 'little weight' has low relative importance, any change in its price will have a minimal effect on the total index calculation compared to a commodity with a large weight.