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Price index is a measure that express a current (changing) price level in terms of
the level at a fixed point in time called the base period.
Example
Table I
Year Production Indexs
1974 75 100
1975 60 80
1976 65 87
1977 70 93
Time period can also be used as a base period. For example 1974- 75
Based on the previous example:
Qo = 75 + 60 = 67,5
2
Method I :
I B = Q 1976 . 100 = 65 x100 = 108
Q 1975 60
Method II :
I A = 80
IL = 87
I B = I L .100 = 87 x100= 108
IA 80
Index Numbers Simple Index Numbers
Composite Index Numbers(CIN)
Unweighted
Index Numbers
Weighted
Index Numbers
Simple price index is a measure that express a current (changing) price level of a
commodity (an item) in terms of the level at a fixed point in time called the
base period.
Composite price index is a measure that express a current (changing) price level
of some commoditie (items) in terms of the level at a fixed point in time called
the base period.
Example: Groceries
2. Geometric mean
IUT = ( √TT Pt/Po) 100
3. Median
I MT = Median of Relative price
4. Modus
Imot = Modus of Relative price
5. Harmonic Mean
IHAT = K
∑1 . 100
Pt/Po
6. Kuadratic Mean
General formula:
1. If W = Qo Index Laspeyres
IL = ∑ Pt Qo . 100
∑ Po Qo
2. If W = Qt Index Paasche
Ip = ∑ Pt.Qt . 100
∑ Po.Qt
Qt = Quantity at year t
3. If W = Qo + Qt Index Marshall Edgeworth
IM = ∑ Pt (Qo + Qt ) .100
∑Po (Qo + Qt)
1. If w = Po Qo
I o/t = ∑ (Pt/Po)PoQo).100
∑ Po Qo
2. If W = Pt.Qo
I o/t =∑ (Pt/Po) PoQo .100
∑ Pt Qo