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    Reference PPT Index Number

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    Alishba Khan
    This document discusses different types of index numbers used to measure changes in variables over time. It defines simple and composite index numbers, and explains that composite indexes are more important as they are computed for two or more variables using weighted or unweighted averages. The document also discusses the construction of index numbers for wholesale prices, including the selection of commodities, base period, average type, and weights. Finally, it provides examples of calculating Laspeyres and Paasche price and quantity index numbers.

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    Reference PPT Index Number

    Uploaded by

    Alishba Khan
    114 views11 pages
    This document discusses different types of index numbers used to measure changes in variables over time. It defines simple and composite index numbers, and explains that composite indexes are more important as they are computed for two or more variables using weighted or unweighted averages. The document also discusses the construction of index numbers for wholesale prices, including the selection of commodities, base period, average type, and weights. Finally, it provides examples of calculating Laspeyres and Paasche price and quantity index numbers.

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    This document discusses different types of index numbers used to measure changes in variables over time. It defines simple and composite index numbers, and explains that composite indexes are more important as they are computed for two or more variables using weighted or unweighted averages. The document also discusses the construction of index numbers for wholesale prices, including the selection of commodities, base period, average type, and weights. Finally, it provides examples of calculating Laspeyres and Paasche price and quantity index numbers.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    114 views11 pages

    Reference PPT Index Number

    Uploaded by

    Alishba Khan
    This document discusses different types of index numbers used to measure changes in variables over time. It defines simple and composite index numbers, and explains that composite indexes are more important as they are computed for two or more variables using weighted or unweighted averages. The document also discusses the construction of index numbers for wholesale prices, including the selection of commodities, base period, average type, and weights. Finally, it provides examples of calculating Laspeyres and Paasche price and quantity index numbers.

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    Index Number

    Index Number

     An index number is a statistical measure of average change in variable or a group of


    variable with respect to time or space.
     the variable may be enrolment of student , cost of education for college, prices of
    particular commodity
    Simple & Composite Index Number

     Computed for Single variable


     The value of variable for each period divided by value in the base period multiplied by 100.
     Wages paid to worker in an Institution in 1980 and 1983 were Rs 9,950 and 11,580.
    (11580/9650)*100=120
     Composite are more important, Computed for two or more variables
     Weighted and Unweighted
     Eg: Wholesale price index number, consumer price index.
    Construction of Index Number for Wholesale
    Prices

     Selection of Commodities
     Selection of Base period
     Fixed base
     Chain base
     Selection of Average to be used
     AM
     Median
     GM
     Selection of appropriate weights
    Price Relative Index │Quantity Relative Index

      p = x 100  q = x 100

    Commodity 1957(prices) 1958(prices) Commodity 1957(Quantity) 1958(Quantity)

    Wheat 351 335 Wheat 5 8

    Rice 35 32 Rice 6 9

    Salt 10 11 Salt 8 11

    Sugar 1.25 1.40 Sugar 9 12

    Cloth 2.25 2.60 Cloth 23 26

    Milk 0.75 0.85 Milk 21 35


    Weighted Price Index Numbers

     An index number that measures the change in the prices of a group of commodities when
    the relative importance of the commodities has been taken in to account is called
    Weighted Price Index.
     An index is called weighted aggregative index when it is constructed for an aggregate of
    items(prices) that have been weighted in some way(by corresponding quantities produced,
    consume or sold) as as to reflect their importance.
    Price Index

     Laspeyres’ Type
     Index represents the relative cost in different years of purchasing the base year quantities of various
    commodities at the given year price.
     The quantity weight remain unchanged for the subsequent periods and only information on the latest
    prices need to be obtained.
     Paasche’s Type
     This is the percentage ratio of the aggregate of given period prices weighted by the quantities
    produced/consumed in given period to the aggregate of base period prices weighted by the given period
    quantities
     Fishers’
     Geometric mean of Laspeyre’s and Paasche’s type
    Weighted Aggregative “Price Index”

     When the fixed quantity weights are determined from the base-year usage, the index is called a
    Laspeyres index.
     When the weights are based on period t usage the index is a Paasche index.
     Construct the Price index Laspeyre’s and Paasche’s for 1960 on the basis of 1956
    data
    Commodity Prices Quantities
    1956(po) 1960(p1) 1956(qo) 1960(q1)

    A 64 75 270 276
    B 40 45 124 118
    C 18 21 185 267
    D 58 68 185 267

    Laspeyers’ = (41140/35310)x100 = 116.5


    Paasche’s = (46707/40048)x100 = 116.6
    Weighted Aggregative “Quantity Index”


      Laspeyer’s Type

     Paasche’s Type

     Construct the Quantity index Laspeyre’s and Paasche’s type for 1960 on the basis of
    the data from 1959.

    Commodity Quantity Prices


    1959(qo) 1960(q1) 1959(po) 1960(p1)

    A 200 350 15 16
    B 100 220 18 20
    C 30 45 100 120

    Laspeyers’ = (13710/7800)x100 = 175.8


    Paasche’s = (15400/8800)x100 = 175.0

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