Question

Discuss the general method of constructing an index number & uses of an index number.

Answer 1

Answer:

While constructing an index number due weightage or importance should be given to the various commodities. ... The weights are determined with reference to the relative amounts of income spent on commodities by consumers. Weights may be given in terms of value or quantity.

Answer 2

Answer:

In general, construction of index number is further available for the division in two parts: Simple and Weighted. Furthermore, the simple method is classified into simple aggregative and simple relative. Similarly, the weighted method is classified into weighted aggregative and weighted average or relative