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Index Number (Group&)

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28 views15 pages

Index Number (Group&)

Uploaded by

Nasir Rock
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INDEX

NUMBER

S H I FA B A N O

MD NASIR IQBAL
AKASH
KA JA L RA S T O G I
A L A N K A R A R J A R I YA

NITISH KUMAR
G U P TA
TEAM

NITISH KUMAR
MD NASIR IQBAL AKASH ALANKAR ARJARIYA
GUPTA

KAJAL RASTOGI SHIFA BANO

2
WHAT IS AN INDEX NUMBER
An index number measures how much a
variable changes over time

We calculate the index number by finding the


ratio of the current value to a base value
Characteristics of Index Numbers :

 Index numbers are specialized averages.

 Index numbers measure the change in the level of a


phenomenon.

 Index numbers measure the effect of changes over a period of


time.
Classification of Index Numbers SIMPLE
AGGREGATIVE

UNWEIGHTED SIMPLE
AVERAGE OF
PRICE
RELATIVE

INDEX
NUMBERS WEIGHTED
AGGREGATIVE

WEIGHTED WEIGHTED
AVERAGE OF
PRICE
RELATIVE
SIMPLE AGGREGATIVE METHOD
It consists in expressing the aggregate price of all
commodities in the current year as a percentage of the
aggregate price in the base year.

P01
= ∑ P1
∑ P0

P01= Index number of the current year.


P1 = Current year's price of all commodities.
P0 = Base year's price of all commodities.
SIMPLE AVERAGE OF RELATIVES METHOD
 The current year price is expressed as a price relative of the base year
price.
 These price relatives are then averaged to get the index number.
 The average used could be arithmetic mean, geometric mean or even
median.
P1
P01 P0
=
∑ ×100

Where N is Numbers Of items.


WEIGHTED AGGREGATIVE METHOD
 Laspeyre’s Method  Paasche’s Method

 Dorbish &P01
Bowleys  Fisher’s Ideal Index
=
Method Method
 Marshall-Edgeworth
Method

Kelly’s Method
Question 1
An Index is at 100 in 2014. It rises by 5 percent in 2015; falls 8 percent in
2016; rises 8 percent in 2017; remains the same in 2018; rises 10 percent
in 2019 and rises 15 percent in 2020. Calculate index number for the
years 2014 through 2020.
SOL : Year Index
Number
2014 100
2015 105
2016 97
2017 105
2018 105
2019 115
2020 130
Question 2
From the following data about five commodities, determine the simple
aggregative price index for the year 2020.
Commodity: A B C D E
Unit: Kg Metre Sq. ft. Kg Litre
Price in Year 25 160 50 40 16
2019:
Price in Year 28 200 50 32 24
SOL : Suppose
2020: P0 = Base year's (2019) price of all commodities
P1 = Current year's (2020) price of all commodities

Now, ∑ P0 = 25 + 160 + 50 + 40 + 16 = 291 and ∑ P1 = 28 + 200 + 50 + 32


+ 24 = 334
∑ P1
∑ P01= ×100= 334 ×100=114.77
∑ P0 291
Thus, % Change (on an average) in price of different commodities=114.78-100 =14.78%
Question 3
Following Information about prices and quantities for 2019 and 2020 is
given:
Commodity: 2019 2019 2019 2019
Price Quantity Price Quantity
A 25 150 30 140
B 15 50 20 30
C 50 120 50 160
D 40 80 35 140
E 10 130 15 120
 Laspeyre‘s price index for 2020
 Paasche's price index for 2020
 Fisher's price index for 2020
 Fisher's price index for 2019
 Fisher's quantity index for 2020
 Value index for 2020
Sol: Commodit
y:
Price
(p0)
Quantity Price
(q0) (p1)
Quantity
(q1) (p1q0) (p0q0) (p1q1) (p0q1)

A 25 150 30 140 4500 3750 4200 3500


B 15 50 20 30 1000 750 600 450
C 50 120 50 160 6000 6000 8000 8000
D 40 80 35 140 2800 3200 4900 5600
E 10 130 15 120 1950 1300 1800 1200
TOTAL 16250 15000 19500 18750

 Laspeyre‘s price index for 2020

16250
________
= ×100 =108.33
15000
 Paasche's price index for 2020

19500
________
= ×100=104
18750
 Fisher's price index for 2020

16250 19500
=________×________×100=106.14
15000 18750

 Fisher's price index for 2019

P10 
 p q   p q 100 
0 1 0 0 18750

15000
100 
 p1 q194.20
 p1 q0
19500 16250
 Fisher's quantity index for 2020

q01 
 q p  q
1 0 1 p1
100 
18750

19500
100  150
15000 16250
 q 0p 0  q 0p 1
 Value index for 2020

19500
________
= ×100=130
15000
Thank
You
GROUP - 7

PGDM 23-25

15

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