213 views

Uploaded by shashi katie

QT

save

- PPT for Index Numbers
- Correlation
- QP MBA Statistics for Management MB0040.Doc
- MODUL BERJAYA 2 - 2018.docx
- CORRELATION.....PPT
- lec 1.ppt
- Purchasing Managers´ Index, January 2, 2013
- 2011_datamonitor_fruitsvegetables_ohec4852
- POLONIA
- Texas Manufacturing Outlook Survey
- Static Stics
- WPI and CPI Used to Measure Inflation in India
- Correlation Ppt
- Kertas 2 Pep Akhir Tahun Ting 4 Terengganu 2007_soalan
- Business Statistics-S2(2012)-3009L3
- Dnvgl Rp c205
- Continuous Probability Distribution
- Agricultural Policy
- Monthly Summary of Economic Statistics
- RM
- paper1 4statitics
- HELL1
- Mean, Mode, Median & Range, information handling revision notes from GCSE Maths Tutor
- Solution
- statistics project
- reflective
- Chapter 02 Slides
- A Detailed Lesson Plan in Mathematics 8
- DTI indicator
- The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution
- Dispatches from Pluto: Lost and Found in the Mississippi Delta
- Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
- Sapiens: A Brief History of Humankind
- The Unwinding: An Inner History of the New America
- Yes Please
- The Prize: The Epic Quest for Oil, Money & Power
- A Heartbreaking Work Of Staggering Genius: A Memoir Based on a True Story
- Grand Pursuit: The Story of Economic Genius
- This Changes Everything: Capitalism vs. The Climate
- The Emperor of All Maladies: A Biography of Cancer
- John Adams
- Devil in the Grove: Thurgood Marshall, the Groveland Boys, and the Dawn of a New America
- Rise of ISIS: A Threat We Can't Ignore
- Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America
- The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
- The World Is Flat 3.0: A Brief History of the Twenty-first Century
- Team of Rivals: The Political Genius of Abraham Lincoln
- The New Confessions of an Economic Hit Man
- Bad Feminist: Essays
- How To Win Friends and Influence People
- Angela's Ashes: A Memoir
- Steve Jobs
- The Incarnations: A Novel
- You Too Can Have a Body Like Mine: A Novel
- The Silver Linings Playbook: A Novel
- Leaving Berlin: A Novel
- Extremely Loud and Incredibly Close: A Novel
- The Sympathizer: A Novel (Pulitzer Prize for Fiction)
- The Light Between Oceans: A Novel
- The Blazing World: A Novel
- The Rosie Project: A Novel
- The First Bad Man: A Novel
- We Are Not Ourselves: A Novel
- Brooklyn: A Novel
- The Flamethrowers: A Novel
- A Man Called Ove: A Novel
- Bel Canto
- The Master
- Life of Pi
- The Love Affairs of Nathaniel P.: A Novel
- My Sister's Keeper: A Novel
- A Prayer for Owen Meany: A Novel
- The Cider House Rules
- The Perks of Being a Wallflower
- Lovers at the Chameleon Club, Paris 1932: A Novel
- The Bonfire of the Vanities: A Novel
- Interpreter of Maladies
- Beautiful Ruins: A Novel
- The Kitchen House: A Novel
- Wolf Hall: A Novel
- The Art of Racing in the Rain: A Novel
- The Wallcreeper

You are on page 1of 34

PRESENTED BY

RADHEMOHAN SHARMA

NEIRAV CHOUHAN

CONTENTS

1.Introduction

2. Classification of index numbers

**3. Method of constructing index
**

numbers

4. Value index numbers

5.Chain index numbers

6. References

INTRODUCTION

Historical, the first index was constructed

in 1764 to

compare the Italian price level in 1500.

through

originally developed for measuring effect

change in price .

Definition

Index numbers helps us to find out

percentage change in the value of

different variables overtime with

reference to some base year which

happens to be year of comparison. When

the two various group are studies

simultaneously

the percentage change is taken as

average of all groups.

CHARACTERISTICS

Ø Index numbers are specialized

averages.

**Ø Index numbers measure the change
**

in the level of a phenomenon.

Ø

Ø Index numbers measure the effect of

change over a period of time.

USES OF INDEX NUMBERS

Ø They help in framing suitable

policies.

Ø

Ø

Ø They reveal trends and tendencies.

Ø

Ø

Ø Index numbers are very useful in

deflating ..

CLASSIFICATION OF INDEX

NUMBERS

Index numbers may be classified in

**terms of what they measure . In
**

economics and business the

classification are:

Ø Price

Ø Quantity

Ø Value

Ø Special purpose

METHOD OF CONSTRUCTING

INDEX NUMBERS

1.UNWEIGHTED INDEX

NUMBERS

§ 1.Simple aggregate method -

**§ This method is used to construct a
**

price index ,the total of current

year prices for the various

commodities in question is divided

by the total of base year prices

and the quotient is multiplied by

100.

P 01 =

∑p1

×100

§ ∑p 0

§

CONTD……………

∑p1 = TOTAL OF CURRENT YEAR PRICES FOR

VARIOUS

COMMODITIES

** ∑p0 = TOTAL OF BASE YEAR PRICES FOR VARIOUS
**

COMMODITIES

**THE STEPS REQUIRED IN COMPUTATION
**

:

** ADD THE CURRENT YEAR PRICES FOR VARIOUS
**

CONTD………….

Q. From the following data constructed an

**index number for 2005 taking 2004 as base
**

**Commodity & unit prices (2004)
**

prices(2005)

Butter (kg) 110

120

Cheese(kg) 75

80

Milk(lt.) 13

13

Bread(1) 9

9

Eggs(doz.) 18

20

CONTD………

THE TOTAL OF 2007 means

∑p0 = 1075

**THE TOTAL OF 2008 means
**

∑p1= 1102

P 01 =

∑ p 1

×100 =

1102

×100 = 102.5

∑p 0 1075

2. SIMPLE AVERAGE

OFRELATIVES METHOD

When this method is used to constructed a price

index

, price relatives are obtained for the various

items

included in the index and then an average of

these

relative is obtained using any one of the

measures of p1

∑

central tendency ,

p

× 100

arithmetic mean

, median ,

P 01 ,=

mode etc. 0

× 100

When arithmetic mean N is used for averaging the

relatives .

CONTD…………..

When geometric mean is used the formula would be

p1

∑log

p 0 ×100

log p01 =

N

EXAMPLE

From the data given below construct the index

numbers for 2007 taking 2006 as base by using

Arithmetic mean.

COMMODITIES

PRICE IN 2006 (Rs.) PRICE IN 2007 (Rs.)

A 8 12

B 4 4

C 6 8

D 12 14

E 10 12

SOLUTION

**COMMODITIES PRICE IN PRICE IN PRICE
**

2006 (Rs.) 2007 (Rs.) RELATIVES

A 8 12 150.00

B 4 4 100.00

C 6 8 133.33

D 12 14 116.66

E 10 12 120.00

CONTD………….

SOL.

p1

∑ p 0 ×100

p01 =

N

619 .99

= =123 .98

5

LIMITATIONS

A.It is not affected by the units in

which prices are quoted . It is

also not affected by absolute

values of prices as prices are

converted into price relatives.

B.

It gives equal importance to all items

2.WEIGHTED INDEX

NUMBERS

Weighted index numbers as has

been stated earlier are those

numbers in which rational weights

are assigned to various chain in an

explicit fashion. The weights assigned

indicate the relative importance of

various items.

WEIGHTED AGGREGATIVE

INDEX NUMBERS

Ø These index are of the simple

aggregative type with the

fundamental difference that weight

are assigned to various items

include in various method of

assigning weights.

some of the important methods are :

Ø Laspeyresmethod

Ø Paasche’s method

Ø Dorbish and bowley’s method

Ø Fisher ideal method

Ø Marshall Edgeworth method

Ø Kelly’s method

LASPEYRES METHOD

The method which uses quantities

consumed

during the base period , is the method

most

commonly used it requires quantity

measures for ∑

P 01 =

p1q 0

× 100

∑pq

only one period.

o 0

**p1 = prices in the current year
**

p0 = prices in the base year

**q0 = quantities sold in the year
**

PAASCHE’S METHOD

This method was suggested by

Paasche’sin 1874. In this method the

weights of the current year are used.

P 01 =

∑ pq

1 1

×100

∑p q

0 1

This method was suggested by

Paasche’sin 1874. In this method the

weights of the current

year are used.

DROBISH & BOWLEYS METHOD.

This method is a combination of Laspeyre’s and

**Paasche’s methods. If we find out the arithmetic
**

average of Laspeyre’s and Paasche’s index we get the

index suggested by Drobish & Bowley.

∑ pq + ∑ pq

1 0 1 1

p01 =

∑ pq ∑pq

0 0 0 1

× 100

2

Fisher’s ideal index

Fisher ideal index number is the geometric

**mean of the laspeyers and paasche’s index
**

number.

P 01 =

∑q p × ∑q p

1 0 1 1

×100

∑q p ∑q p

0 1 0 1

this is known as “ideal” because of following

reason :

1. It is based on geometric mean

2. It takes both current & base year prices and

quantities

Marshall-edgeworth

method

q In this method also both the current as

well as base year price and quantities

are considered.

q ∑

P 01 =

∑

p1q 0 + p1q1

×100

∑p q +∑p q

0 0 0 1

q

Numerator consist of aggregate of current

**year price multiplied by weight of both the
**

base year as well as current year.

denominator consist of the base year price

**multiplied by the sum of base year &
**

current years weight.

KELLY’S METHOD

q Kelly thinks that a ratio of aggregates with selected

weights (not necessarily of base year or current

year) gives the base index number .

q refers to the quantities of the year which is

selected as the base. It may be any year, either base

year or current year.

p01 =

∑ pq

×100

1

∑p q 0

EXAMPLE

q index numbers of prices from the following data by

applying .

q (1) Laspeyers Index (2) Paasche’s Index (3) Dorbish

& Bowley’sIndex (4) Fisher Ideal Index (5)

Marshall-Edgeworth Index .

**commodity Price(2005) Quantity(2005) Price(2006 Quantity(2006
**

) )

A 2 8 4 6

B 6 10 7 6

C 5 14 6 11

D 3 19 3 14

SOLUTION

COM P0 Q0 P1 Q1 P1Q0 P0Q0 P1Q1 P0Q1

MODY (2005) (2005) (2006) (2006)

IT

A 2 8 4 6 32 16 24 12

B 6 10 7 6 70 60 42 36

C 5 14 6 11 84 70 66 55

D 3 19 3 14 57 57 42 42

∑p1q0 ∑p0q0 ∑p1q1 ∑p0q1

=243 =203 =174 =145

CONTD………….

Laspeyres method-

p 01 =

∑ pq

1 0

× 100 243

= ×100 =119 .70

∑pq

o 0 203

Paasche’s method-

∑ p1q1 174

p 01 = × 100 = × 100 = 120

∑ p 0 q1 145

CONTD……..

Bowley’smethod-

**∑ p 1q 0 ∑ p 1q1 243 174
**

+

+

∑ p 0 q 0 ∑ p 0 q1 = 203 145 ×100

p 01 =

× 100 2

2

119 .70 +120 .00

= ×100 =118 .60

2

CONTD…………..

. Fisher Ideal Index Method-

P 01 =

∑q p × ∑q p

1 0 1 1

×100

∑q p ∑q p

0 1 0 1

1.19×1.20 ×100

CONTD…….

**=1.1949 ×100 =119 .49
**

**Index number is 119.49
**

VALUE INDEX NUMBERS

Value is the product of price and

quantity. A simple ratio is equal to

the value of the current year

divided by the value of base year.

If the ratio is multiplied by 100 we

get the value index number.

∑

pq 1 1

V = ×100

∑p q 0 0

THE CHAIN INDEX

NUMBERS

When this method is used the

comparisons are not made with a

fixed base, rather the base changes

from year to year. For example, for

2007,2006 will be the base ; for 2006,

2005 will be the same and so on.

Chain index for current year

Average link relative of current year × Chain index of previous yr

=

100

REFERENCES

1. S.P. GUPTA “BUSINESS STATISTICS” .

**2.RECHARD I. LEVIN & DAVID S. RUBIN
**

**“STATISTICS FOR MANAGEMENT” .
**

3. B. M. AGARWAL

- PPT for Index NumbersUploaded byNishar Naqvi
- CorrelationUploaded byKeerthana Sahadevan
- QP MBA Statistics for Management MB0040.DocUploaded byAnonymous UFaC3Tyi
- MODUL BERJAYA 2 - 2018.docxUploaded byNorazah Abdul Shukor
- CORRELATION.....PPTUploaded bySomhita Chakraborty
- lec 1.pptUploaded byUmair Gurmani
- Purchasing Managers´ Index, January 2, 2013Uploaded bySwedbank AB (publ)
- 2011_datamonitor_fruitsvegetables_ohec4852Uploaded bythereisaneed
- POLONIAUploaded byIlinca Steriu
- Texas Manufacturing Outlook SurveyUploaded byCoy Davidson
- Static SticsUploaded byHarshit Modhia
- WPI and CPI Used to Measure Inflation in IndiaUploaded byakuril
- Correlation PptUploaded byLokesh Jain
- Kertas 2 Pep Akhir Tahun Ting 4 Terengganu 2007_soalanUploaded byke2
- Business Statistics-S2(2012)-3009L3Uploaded byb3nzy
- Dnvgl Rp c205Uploaded byAshish Gupta
- Continuous Probability DistributionUploaded byD'angelo Deeps
- Agricultural PolicyUploaded byMuhammad Jufri
- Monthly Summary of Economic StatisticsUploaded byAnonymous j5sBJA9
- RMUploaded bySaba Kazi
- paper1 4statiticsUploaded bykaspa
- HELL1Uploaded byMuhammad Nur Afif
- Mean, Mode, Median & Range, information handling revision notes from GCSE Maths TutorUploaded bygcsemathstutor
- Uploaded byMutimba
- SolutionUploaded byxandercage
- statistics projectUploaded byapi-243749103
- reflectiveUploaded byapi-351776914
- Chapter 02 SlidesUploaded byAnonymous O5asZm
- A Detailed Lesson Plan in Mathematics 8Uploaded byApril Anne Villaflor
- DTI indicatorUploaded byforex