Suppose owing to increased prices, a consumer reduces consumption of all commodities by 10% compared to the previous year. If IL  and IP  are the Laspeyres' and Paasche's price indices for the current year with the previous year as base, then

  • IP= 0.9 X IL
  • IL= 0.9 X IP
  • IPXIL= 0.9 X(100)2
  • IP=IL
 Suppose owing to increased prices, a consumer reduces 
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