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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Index numbers
What is Fisher’s ideal index? Is there a formula to calculate this? I came across the following question which asked for it:
Laspeyre index for price in 20X5 ( with base year of 20X0) 150
Corresponding Passche index 138.24
What is Fisher’s ideal index?
What is the logic behind Fisher’s ideal index and its relationship with these two numbers?
It is the square root of the Laspeyre index multiplied by the Paasche index. It is a better indicator than either of the two indices on their own (I explain the problems with Laspeyre and Paasche in my free lectures).
However it is not examined in Paper MA.