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Tests for an Ideal Index Number
1. Factor Reversal Test
Factor Reversal Test indicates that when the price index is multiplied along with a quantity index that is factors are reversed, it should result in the value index.
2. The time reversal test
If we reverse the time subscripts of a quantity or price index, the result must be reciprocal of the original index.
Consider two bags, A and B, with the following contents Bag A Bag B 3 white marbles 4 white marbles 2 red marbles
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cos^2a+sin^2a
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