why lasperes index number is not called as ideal

Hey,

The Laspeyre's and Paasche's index numbers are not the ideal method because of the following reasons.
  1. These tests does not satisfy the time reversal test and factor reversal test.
  2. These methods do not consider the price and quantities of the current year.
Hope this clarifies your doubt. In case of further doubts do get back to us.
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  • 1
the formula is sigmap1q0/sigmap0q0
because it uses only base year quantities not the current year quantities
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