## Simple aggregative method index number

Simple Aggregative Method In this method, the total price of commodities in a given (current) year is divided by the total price of commodities in a base year and expressed as percentage: \[{P_{on}} = \frac{{\sum {P_n}}}{{\sum {P_o}}} \times 100\] The ratio of the sum of weighted prices of current and base time periods multiplied by 100 is called weighted aggregate price index. This index is calculated after allocating weights to each commodity on the basis of their relative importance. Weights of these commodities are then multiplied by the prices of base and current time periods. Simple Aggregative Method in Statistics Home » Statistics Homework Help » Simple Aggregative Method Under this method, the price index for a given period is obtained by dividing the aggregate of different prices of the current year by the aggregate of different prices of the base year, and multiplying the quotient by 100. I. Weighted Aggregative Index Numbers. These indices are of the simple aggregative type with the fundamental difference that weights are assigned to the various items included in the index. There are various methods of assigning weights and consequently a large number of formulae for constructing index numbers have been devised of which some of The method devised by the German Economist Etienne Laspeyre in 1871 for calculating the price indices for a current period is known as Laspeyre’s method of index number. Under this method, we get the weighted index on the basis of aggregative expenditure assuming that the quantities consumed in the base year are also the quantities consumed

## Simple index number: A simple index number measures the relative change of a using two methods, namely Price Relative method and Aggregate method.

A number of different formulae, more than hundred, have been proposed as means of calculating price indexes. While price index formulae all use price and possibly quantity data, they aggregate 2) kggregative methods a) Simple aggregative fonnula b) Weighted aggregative formula. 1) Laspeyres'index ni Paasche's index iii) Edgeworth-Marshell's index. The basic device used in all methods of index number construction is to average the relative Simple aggregative Price Index for 1999 and 2000 over 1998=. This procedure is called shifting of base. Exercise. Find by simple aggregate method, the index number of the following data: Commodity, Base Price, Current 18 Jun 2010 The method in which sum of prices of all the commodities in the current period is divided by the total prices in the base period is called Methods of constructing index numbers: There are two methods to construct index Weighted aggregative index numbers: These index numbers are the simple

### 2) kggregative methods a) Simple aggregative fonnula b) Weighted aggregative formula. 1) Laspeyres'index ni Paasche's index iii) Edgeworth-Marshell's index.

There are two methods of constructing unweighted index numbers: (1) Simple Aggregative Method (2) Simple Average of Relative Method. Simple Aggregative A number of different formulae, more than hundred, have been proposed as means of calculating price indexes. While price index formulae all use price and possibly quantity data, they aggregate 2) kggregative methods a) Simple aggregative fonnula b) Weighted aggregative formula. 1) Laspeyres'index ni Paasche's index iii) Edgeworth-Marshell's index. The basic device used in all methods of index number construction is to average the relative Simple aggregative Price Index for 1999 and 2000 over 1998=. This procedure is called shifting of base. Exercise. Find by simple aggregate method, the index number of the following data: Commodity, Base Price, Current 18 Jun 2010 The method in which sum of prices of all the commodities in the current period is divided by the total prices in the base period is called

### The price index number by simple average of relative method . using geometric mean for 2004 taking 2000 as base year is given by. P 01 = Antilog [(1/N)(∑ log R)] P 01 = Antilog [(1/5)(10.6704)] P 01 = Antilog 2.1341. P 01 = 136.2. Example – 03: Prices of commodities for the year 2002 and 2003 are as given in table.

of construction of index numbers for instance- Simple and Weighted. Furthermore, the simple method is classified into simple aggregative and simple relative. Here, N= Number of goods and P= Index number. 2] Simple Aggregative Method. It calculates the percentage ratio between the aggregate of the prices of all Construction of price index numbers through various methods can be understood with the help of the following examples: 1. Simple Aggregative Method: In this There are two methods of constructing unweighted index numbers: (1) Simple Aggregative Method (2) Simple Average of Relative Method. Simple Aggregative A number of different formulae, more than hundred, have been proposed as means of calculating price indexes. While price index formulae all use price and possibly quantity data, they aggregate

## For example, index numbers computed in above table are simple index numbers because they have been computed for a single Aggregate Index Numbers Price relatives computed by chain base method are called link relatives.

For example, index numbers computed in above table are simple index numbers because they have been computed for a single Aggregate Index Numbers Price relatives computed by chain base method are called link relatives. Steps involved in Simple Aggregative Method: Add the prices of all the commodities in the current year. Denote the sum as ∑ P 1; Add the prices of all the commodities in the base year. Denote the sum as ∑ P o; Use the following formula to find simple price index number of current year based on the base year. Simple Aggregative Price Index – (∑ P n / ∑ P 0) * 100. Where ∑P n = Sum of the price of all the respective commodity in the current time period. ∑P o = Sum of the price of all the respective commodity in the base period. The simple aggregative index is very simple to understand. However, there is a serious defect in this method. The method in which sum of prices of all the commodities in the current period is divided by the total prices in the base period is called unweighted aggregate index. Since simple aggregate index does not give relative importance to the commodities therefore it is neither meaningful nor representative index.

Here, N= Number of goods and P= Index number. 2] Simple Aggregative Method. It calculates the percentage ratio between the aggregate of the prices of all