Consider the following statements regarding index numbers:(i) Simple average of price relative is a weighted index numbering method.(ii) The index number for the base year is always 100.(iii) If the price index is 25, then the prices have increased by 25%.(iv) If the price index is 75, then the prices have decreased by 25%.Which of the statements are correct?
- A(i), (ii) and (iv)
- B(ii) only
- C(ii) and (iii)
- D(ii) and (iv)
Solution & Step-by-step Explanation
(i) Incorrect: The "Simple average of price relative" is an unweighted (simple) method.(ii) Correct: By convention, the index number of the base year is set to 100.(iii) Incorrect: If the price index is 25, it means prices are 25% of the base year, signifying a 75% decrease, not an increase.(iv) Correct: A price index of 75 means prices are 75% of the base year value (), which implies a decrease.Statements (ii) and (iv) are correct.