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Unit 18: Methods—Simple Average of Price Relatives
Commodities Price in 2004 Price in 2005 Notes
(Rs.) (Rs.)
A 50 70
B 40 60
C 80 90
D 100 120
E 20 20
Solution:
(a) INDEX NUMBER USING ARITHMETIC MEAN OF PRICE RELATIVES
Commodities Price in 2004 Price in 2005 Price
P 1
(Rs.) (Rs.) P 0 × 100
P 0 P 1
A 50 70 140.0
B 40 60 150.0
C 80 90 112.5
D 110 120 109.1
E 20 20 100.0
P
∑ 1 × 100 = 611.6
P 0
P
∑ 1 × 100
P 611.6
P 01 = 0 N = 5 = 122.32
(b) INDEX NUMBR USING GEOMETRIC MEAN OF PRICE RELATIVES
Commodities Price in 2004 Price in 2005 Price Relatives Log P
P 0 P 1 P
A 50 70 140.0 2.1461
B 40 60 150.0 2.1761
C 80 90 112.5 2.0512
D 110 120 109.1 2.0378
E 20 20 100.0 2.0000
log P = 10.4112
⎡ ∑ logP ⎤
P 01 = Antilog ⎢ ⎣ N ⎥ ⎦
⎡ ⎤ 10.4112
= Antilog ⎢ ⎥ = Antilog 2.0822 = 120.9
⎣ 5 ⎦
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