PART 1 An index number is percentage ratio of a prices, quantities, or values comparing two time period or two points in time.

A price index measures the changes in the money value of an item (or group of item ) overtime whereas a quantity index measures the non-monetary value of an item ( or a group of item) overtime. Formula Price Index, I, is given by,

where, = price at the base time = price at the specific time

Weightage means the importance or coverage (in %) of the of a sub item in the whole main Item. A composite index is a simple index also known as a relative, is a comparisons involving one item but an index whose calculation is based on several item. A very famous example of composite function is the Retail Price Index (RPI) which measures the change in costs in the item in the expenditure of the average household. Formula Composite Index, I, is given by

where, I= price index or index number W = weightage